The idea of retail investors owning shares of smartphone camera lens supplier Largan Precision Co. (???), the most expensive stock in the local equity market, will no longer be a dream, thanks to a new investment mechanism, the Taiwan Stock Exchange (TWSE) said Monday.
The TWSE, which operates the local main board, said that the Financial Supervisory Commission (FSC) has come up with a plan to introduce a regular small investment mechanism for retail investors, who have long complained that they cannot afford high-priced stocks such as Largan.
On Monday, Largan shares closed up 0.82 percent to close at NT$3,695.00 (US$116) on the main board. The latest closing price means that investors will have to spend almost NT$3.7 million to buy a package of 1,000 Largan shares, the minimum purchase size for a stock in the local market.
Institutional investors have long been the major players in Largan stocks, as most retail investors are deterred by the high share price.
Under the FSC's new investment mechanism, retail investors will entrust a brokerage to buy high-priced stocks, like Largan, at a fixed investment amount each time on a regular basis over a timeframe of several years to own 1,000 Largan shares and even more in the future, TWSE Chairman Shih Jun-ji (???) told reporters.
Largan will be just one of the high-priced stocks that retail investors are expected to target through this investment plan in the future.
Shih said that retail investors are expected to build up their investment portfolios through the regular small investment plan and even compile their own exchange traded funds (ETFs).
He said that the new investment mechanism is expected to encourage more retail investors to jump onto the trading floor and eventually increase the trading volume in the local equity market.
The idea of the FSC, the top financial regulator in Taiwan, is similar to a regular savings plan for investors to put their money into mutual funds and the system, called the dollar-cost averaging method, is expected to offset the risk in the long run. The FSC said the method will be appropriate for investors who are keen to hold a stock for the long term.
According to the FSC, several local brokerages, such as Yuanta Securities (???), KGI Securities (???), Fubon Securities (???), Mega Securities (???), Cathay Securities (???) and MasterLink Securities (???), have expressed interest in providing such a regular investment plan to retail investors.
The market expects that the new investment mechanism will go into effect by the end of this year.
Source: Focus Taiwan News Channel