Taipei, The trading of Hon Hai Precision Industry Co. shares will be suspended from Oct. 18 to 25 due to a capital reduction of about 20 percent, the company said Monday.
Shares of Hon Hai -- the world's largest contract electronics maker and Apple Inc. supplier -- will be traded until Oct. 17 before the hiatus, and then start trading again on Oct. 26.
Known as Foxconn internationally, Hon Hai announced in May the capital reduction plan to lower its paid-in capital by NT$34.66 billion (US$1.12 billion), or about 20 percent, to NT$138.63 billion.
To complete the capital reduction, the company will return NT$2 in cash to shareholders for every share they hold on Oct. 26, and its book value per share is expected to rise to NT$83.23, from the current NT$68.58.
The reference stock price for the resumption of trading on Oct. 26 will be the closing price on Oct. 17 divided by 0.8.
It is the first time Hon Hai has launched a capital reduction since it first went public on June 18, 1991, and its goal is to improve its capital structure and to boost returns to its shareholders.
Analysts said the capital reduction comes amid slower sales growth in Hon Hai's contract manufacturing operations, and they believe the move could boost Hon Hai's return on equity by about 20 percent and strengthen investors' confidence in the stock.
Hon Hai shares reacted positively to the capital reduction plan in May, but the stock has come under pressure in recent sessions because of volatility in global markets triggered by rising trade tensions between the United States and China and fears of a fund exodus from the region caused by a stronger U.S. dollar.
On Monday, Hon Hai shares shed 1.95 percent to close at NT$70.50 on the Taiwan Stock Exchange (TWSE) as concerns over global trade continued to haunt investor sentiment. The weighted index on the market ended down 1.44 percent, at 9,901.12.
Before Monday's losses, foreign institutional investors had sold a net 94.48 million Hon Hai shares so far this month, according to the TWSE.
Source: Focus Taiwan News Channel