FSC to set regulations curbing foreign institutional investors
By John Liu, The China Post
July 10, 2014, 12:01 am TWN
TAIPEI, Taiwan -- In order to prevent foreign institutional investors from disclosing false information to manipulate stock prices, the Financial Supervisory Commission (FSC) is set to introduce new rules in mid-July to curb inappropriate practices.
Barclays earlier published a paper casting a pessimistic outlook on Taiwan's electronics sector after it had raised the target price of eMemory Technology by three-fold. Glaucus Research also recently managed to push Asia Plastic Recycle's stock prices.
FSC Chairman Tseng Ming-chung (曾銘宗) said recently that it is “very inappropriate” for foreign securities companies to publicize evaluations on certain industries or individual stocks, or forecast stock prices, affecting the market as a consequence.
Reports Released to Media through Loopholes
This kind of practice often results in abnormal fluctuations in stock prices, and consequently major losses for smaller investors, according to the Securities and Futures Bureau (SFB) under the FSC.
Foreign institutional investors often said in response that their reports were never provided to the media. However, according to the FSC's investigation, there are several ways for the media to obtain these reports. They may download the reports from institutional investors' websites, or obtain them from domestic institutional investors or listed companies that are foreign institutional investors' customers.
Sources say that under the new rules, domestic institutional investors and listed companies will be prohibited from releasing foreign institutional investors' reports to the media. Violations may prevent them from conducting certain business in the future. They will also be investigated for suspicion of insider trading.
Largan Precision's Target Price Raised to NT$3,000
Foreign institutional investors continued to release forecasts yesterday. Barclays Capital analyst Andrew Lu (陸行之) raised the target price of Taiwan Semiconductor Manufacturing Company (TSMC, 台積電) from NT$160 to NT$170, forecasting mass production from the company's 16-nm and 10-nm manufacturing process. TSMC is expected to have a strong performance in the second half of the year, Barclays said.
TSMC is scheduled to release its June revenues today, and to hold an investor conference on July 16 to publicize financial reports of the second quarter.
UBS AG raised the target price of Largan Precision Co. (大立光), a major smartphone camera lens supplier, from NT$2,300 to NT$3,000. The institutional investor pointed out that OIS and VCM will be the main driver for growth.
Largan's sales reached NT$10 billion in the second quarter, reflecting a favorable trend for the company and its leadership role in the industry, UBS said, adding that the Largan's ESP is expected to reach NT$25.17, with yearly and quarterly growth reaching 65.9 percent and 12.6 percent, respectively.