Asustek short-term selling pressures still exist

The three were Goldman Sachs, JP Morgan and Daiwa Securities. Daiwa, meanwhile, predicted Asustek will fall to NT$50.

The stock's decline continued yesterday, although by a smaller margin. The company closed at NT$56.3, down six percent. The stock fell by its seven percent limit Monday.

The stock continued its retreat despite Asustek's conference call it put together on a short notice Monday night, explaining its actions.

During the conference call, Asustek reiterated its decision to reduce capital, yet said it will try to speed up the listing of Pegatron Holdings, which will incorporate the manufacturing unit that Asustek is spinning off.

Goldman Sachs, JP Morgan and Daiwa all believe short-term selling pressures for Asus will be present, although the latter two think there is a chance things will change at the last minute.

“There are three possibilities for the capital reduction's future development,” Daiwa said. “First, Asustek's shareholders will veto the plan. Second, Asustek will be re-listed at the same time Pegatron is listed. Third, Asustek will call off the whole thing and announce a new plan.”

“It is therefore my suggestions that investors take a wait-and-see attitude,” Daiwa said.

Most institutional investors have reaffirmed their support for Asustek's plan, saying that's the right direction for Asustek to take for the long-term.

As for what Asustek's low point will be, Daiwa gave an estimate of NT$50, based on the possible values of Asustek and Pegatron shares after the spin-off.

Separately, the Taiwan Stock Exchange yesterday held a hearing on how stocks should be valued after a spin-off and capital reduction.

The event was attended by some 50 scholars, government officials and industry experts.

The attendees generally agreed that the calculation of Asustek's new price after the spin-off should be based on its market value and net worth.

The attendees also called for the listing of Pegatron as soon as possible to avoid disputes.

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