Taiwan listing move fuels New Focus rally
Shares of New Focus Auto Tech Holdings saw their largest one-day gain in Hong Kong yesterday after the company announced plans to list in Taiwan, which prompted talk of possible longer-term gains.
The manufacturer of vehicle parts climbed as much as 119.3 per cent in the morning session before finishing the day up 31.58 per cent at HK$1.50 as the fifth-biggest winner in the local market.
It was the largest one-day gain for New Focus since it started trading in February 2005, according to Bloomberg data.
'In Taiwan, the industrial stock valuations are higher than in Hong Kong, and [they] are also more active,' said Kenny Tang Sing-hing, the head of research at Redford Securities. 'Listing in Taiwan, where valuations are higher, will [initially] push up the share price [in Hong Kong].'
New Focus announced after the market closed on Wednesday that it had applied to the Taiwan Stock Exchange for the offering and listing of Taiwan depositary receipts representing no more than 90 million new shares.
Details of the exact amount of shares and a timetable for the listing would be available soon, the company said in a filing to the Hong Kong stock exchange.
New Focus has substantial business interests in Greater China, and its move to list in Taiwan comes amid a recent thaw in cross-strait relations.
Leading Hong Kong-listed, Taiwanese-owned companies, such as Want Want China Holdings and Ju Teng International, have already returned to the island's market this year for an additional listing.
New Focus may face selling pressure in the near term, however, after its share price slid substantially in late morning and afternoon trading.
'The trading volume is low and interest is low, so it is quite easy to push up the share price when there is some good news,' said Mr Tang, who added that the stock could retreat in the near term.
