Taipei, July 9 (CNA)
The Taiwan Stock Exchange (TWSE) Thursday urged listed companies on the main board to launch share buyback programs in a bid to help their own stocks take on the volatility in the global financial markets. The TWSE said that buying back their own stocks from the open market will be one of the effective ways for listed companies to restore investor confidence at a time when the local equity market is faced with jitters resulting from a plunge in the China markets.
After a 2.96 percent dive seen on Wednesday, the weighted index on the TWSE registered another 0.69 percent drop to close at 8,914.13 points Thursday, recovering from an early low as some technical support was seen at around 8,800 points.
Along with the China factors, concerns over the debt problems and a decline in Taiwan's exports weighed on investor sentiment here in recent sessions. Since the index hit a recent high of 9,973.12 on April 27, the local main board has fallen more than 10 percent. The TWSE made the share buyback suggestion during the trading session Thursday. It was unusual for the exchange to make such a urgent call before the market close of share buyback programs by listed companies to lend support to share prices.
The exchange said that the sell-off in the local bourse over the past few sessions did not reflect the listed companies' fundamentals but largely resulted from financial turbulence from overseas. According to the TWSE, the listed companies on the main board posted NT$11.16 trillion (US$357 billion) in aggregate consolidated sales for the first five months of this year, up 2.13 percent from a year earlier, indicating that they have stable revenue sources.
The TWSE said that before deciding on any share buyback programs, listed companies should take their own cash flows and other financial conditions into account.
In addition to the urging of share buyback programs, the TWSE has encouraged listed companies to hold investor conferences to boost transparency and allow investors to have a better understanding about these companies' conditions.
Meanwhile, Premier Mao Chi-kuo in a Cabinet meeting held Thursday asked the Financial Supervisory Commission, the top financial regulator in Taiwan, to keep a close eye on the market movements and prevent fluctuations from spinning out of control. (By Tien Yu-pin and Tang Pei-chun and Frances Huang)
Taipei, July 9 (CNA)