Taipei, Shares in Taiwan-based manufacturing giant Hon Hai Precision Industry Co. remained strong from a session earlier, soaring on Wednesday morning after it was revealed that chairman Terry Gou (???) bought about NT$2 billion (US$64.72 million) worth of company shares in November, dealers said.
However, the gains could be short-lived as the iPhone assembler remains bothered by slower than expected global demand for the latest iPhones and the continued trade friction between the United States and China, they said.
As of 12:04 a.m., shares in Hon Hai had risen 3.80 percent to NT$71.00 with 33.46 million shares changing hands on the Taiwan Stock Exchange, where the weighted index was up 0.79 percent to 9,783.67 points.
The stock attracted strong buying soon after the local equity market opened and its momentum continued, dealers said.
"It seems that market confidence in Hon Hai shares was reinforced by Gou's move to spend a lot money to increase his stake in the company," Ta Ching Securities analyst Jerry Chen said.
Due to the gains, Hon Hai's market capitalization rose from NT$948 billion on Tuesday to NT$984 billion.
In a posting to the TWSE on Tuesday, Hon Hai said Gou bought a total of 27 million shares in the company in November, raising the number he owns to 1.32 billion.
After the purchase, Gou's stake in Hon Hai rose from 9.36 percent a month earlier to 9.55 percent at the end of November.
Based on the average closing price of NT$71.75 for Hon Hai shares in November, Gou is estimated to have spent about NT$2 billion to raise his stake in the company.
Commenting on Gou's share purchases, Hon Hai said it was an issue of personal wealth management.
On Tuesday, Hon Hai shares rose 1.03 percent to NT$68.40 after the company reported better-than-expected sales for November.
Hon Hai's November consolidated sales rose 1.99 percent from a month earlier to NT$601.44 billion in November, the highest level ever for the month and the second highest month for the company. The November figure was also up 5.59 percent from a year earlier.
"After the gains on Tuesday and Wednesday, Hon Hai shares have turned technically healthier," Chen said. "But, I am afraid that such a strong showing will be short-lived since market sentiment has been affected by slow iPhone sales," Chen said.
"Moreover, the Washington-Beijing trade disputes have prompted foreign institutional investors to cut their holdings in Hon Hai, which has a broad production base in China," Chen said.
Foreign institutional investors sold a net 77.65 million shares in Hon Hai over the past five trading sessions, with net sales of 8.39 million shares on Tuesday.
Source: Focus Taiwan News Channels