MSCI adds Wan Hai Lines to global standard indexes

Taipei, Feb. 12 (CNA) MSCI Inc. has added Taiwanese container shipper Wan Hai Lines Ltd. (??) to the MSCI Global Standard Indexes, while removing Taiwan-based synthetic rubber supplier TSRC Corp. (??) from the indexes after a quarterly index review. In a statement released on its website, MSCI said that Wan Hai has been removed from the MSCI Global Small Cap Indexes, but included TSRC in the small cap indexes. After the announcement, shares of Wan Hai rose, outperforming the broader market, but shares of TSRC came under heavy downward pressure soon after the local bourse opened. As of 11:07 a.m., shares of Wan Hai had added 0.76 percent to reach NT$33.25 (US$1.05), with 9.02 million shares changing hands, while shares of TSRC had lost 4.68 percent to NT$35.65 on trading volume of 5.59 million shares. The weighted index on the Taiwan Stock Exchange was up 0.03 percent at 9,464.89 points. MSCI holds four index reviews a year, in February, May, August and November, to adjust its indexes. The latest index adjustments are scheduled to take effect after the local bourse closes Feb. 26. "The inclusion of Wan Hai reflects its strong showing in share price movement in recent sessions, as the transportation sector has benefited from a plunge in international crude oil prices" from the second half of last year, Marbo Securities Investment Consulting analyst Chang Chih-cheng said. In the fourth quarter of last year, Wan Hai shares rose 27.3 percent. Before Thursday's upturn, the stock had gained about 19 percent so far this year. "The higher share price means larger market capitalization. That's the reason that MSCI decided to add the stock to the global standard indexes, which triggered interest in the stock today," Chang said. Chang said that as fuel costs account for about 30 percent of shipping companies' operating costs, cheaper oil prices have given a boost to Wan Hai's bottom line and are expected to strengthen its profitability. In the first nine months of last year, Wan Hai posted NT$1.60 in earnings per share, up from NT$0.4 in EPS over the same period of the previous year. The market anticipates that due to lower operating costs, the shipper could report NT $2.2 in EPS in 2014, and that the 2015 figure could rise to about NT$3. "But the recent significant upturn has pushed up the stock closer to the nearest technical resistance level at around NT$34. Investors should keep alert over a possible pullback before an uptrend resumes," Chang said. Chang said lower oil prices cut both ways, hurting the pricing power of petrochemical product providers, including TSRC. He said that the recent weakness of TSRC shares led to the deletion from the MSCI global standard indexes. "In addition to weaker pricing power, the market has fears that TSRC could be hurt by an oversupply after its Chinese rivals raise their production capacity this year," Chang said. "It is possible that the stock will face more selling." In 2014, TSRC posted NT$31.87 billion in consolidated sales, down 7 percent from a year earlier. It was the third consecutive year in which the company had suffered a decline in sales. (By Lo Hsiu-wen and Frances Huang)