The local benchmark index capped 10 consecutive days of gains by hitting a six-year high yesterday, spurred by the Carlyle Group's bid for Advanced Semiconductor Engineering (ASE), the world's largest chip-testing and packaging company.
The TAIEX rose 70.79 points, or 0.95 percent, to 7,498.15 on turnover of NT$127.17 billion (US$3.89 billion), marking its highest close since Sept. 6, 2000.
Foreign investors bought a net NT$16.02 billion of shares yesterday, boosting net purchases to NT$88.57 billion since the beginning of this month.
"International acquisition activities are an inevitable trend," Ann Chang (
Taiwanese stocks that boast healthy fundamentals are relatively cheaper than those in neighboring markets like Hong Kong, making them attractive to foreign investors and private equity funds like the Carlyle Group, Chang said.
The market watcher expects the injection of overseas funds to continue for the foreseeable future, spurring the local equity market, which has lagged behind other Asian markets.
Shares of ASE rose by the 7 percent daily limit to close at NT$37.95, bringing it closer to Carlyle's offer of NT$39 per share.
Encouraging
"[Investors] have been encouraged by the Carlyle bid. It is not a surprise at all. [ASE's] share price is expected to increase [again] on Tuesday [today]," said Fuh-Hwa Securities Investment and Trust analyst Bentham Hung.
Over the weekend, ASE said it had received an indication of interest from a consortium of investors led by Carlyle of the US on a potential offer to acquire all outstanding ASE shares.
At NT$39 per share, the deal values ASE at US$5.46 billion.
ASE chairman and chief executive officer Jason Chang (張虔生) agreed, subject to certain conditions, to commit his 18.4 percent ASE stake to the deal, the company said.
"The Carlyle bid for ASE is likely to trigger a series of takeovers by foreign investors in Taiwan's high-tech sector, using the island as a springboard into the huge mainland [China] market," an analyst with a regional brokerage said.
If the Carlyle bid succeeds, regulations dictate that ASE will be delisted from the local stock market.
Financial Supervisory Commission (FSC) spokeswoman Susan Chang (張秀蓮) said the commission would monitor the "unusual case," as ASE announced the share sale before applying to the commission.
Chang said there was also some concern that a series of foreign takeovers of local listed companies could see the stock market stripped of its top companies.
Citing institutional investor research, local media reported yesterday that 30 local companies, including the world's second-largest contract chip maker, United Microelectronics Corp, along with Acer Inc and Chunghwa Picture Tubes, had been targeted by suitors.
Maintaining an edge
Eager to maintain its edge over rivals in an industry led by Amkor Technology Inc, ASE was expected to use the foreign takeover -- if it went through -- to bypass the government's restrictions on investments in China, dealers said.
Under the nation's current policy on China-bound investments, local companies are only allowed to invest up to 40 percent of their net worth on the mainland.
Critics have called for a relaxation of this regulation which ties the hands of local businesses, while their rivals from around the world face no such restrictions.
"Above all, ASE has come up with a solution for many other Taiwanese companies that have also been weighed down by the government's restrictions against their expanding further in China," said an analyst with a leading foreign securities house who asked not to be named.
Analysts said the government's tight grip on China-bound investments by local companies had a profound impact on the local stock market even before the Carlyle-ASE case surfaced.
This has led local companies to seek overseas listings, with Hong Kong the preferred choice, in order to enjoy much higher valuations than is possible at home, as well as to get around the restrictions on China-bound investments, they said.
Uni-President Enterprises Corp, the flagship of the nation's largest food and beverage conglomerate, has said it plans to list a wholly owned China-based unit in Asia, with Hong Kong seen as one of the possible locations for the listing.
"No final decision has been made on the timing and stock exchange for the planned listing," company spokeswoman Selina Wu (
Meanwhile, the nation's financial stocks also soared for the fifth day yesterday, led by small-cap, independent banks on speculations for their possible acquisition by interested international private equity funds.
The financial sub-index rose 0.34 percent yesterday, with EnTie Bank (
The two banking stocks gained after being listed by analysts among 30 most likely acquisition targets.
EnTie said in a filing to the Taiwan Stock Exchange yesterday that it is open to a partnership with foreign investors.
"A number of foreign investors have called on us before, but no deals have taken place thus far," EnTie vice president Rich Lee (
EnTie would prefer an approach from a foreign bank, rather than a buyout fund, as such a partnership could help to sharpen its management know-how and international presence, Lee said.
Meanwhile, the Carlyle Group is reportedly also interested in acquiring Chinese Bank after taking control of its affiliate, Eastern Multimedia Co (
However, the financial regulator is likely to take an increasingly guarded approach to approaches from international buyout funds.
The FSC held an informal meeting on the issue yesterday, but has not yet reached any conclusions, Susan Chang said.
The financial watchdog would closely review the suitability of buyout funds becoming major shareholder of local financial institutions, she said.
Takeovers of non-financial companies by private equity funds are subject to the approval of the Ministry of Economic Affairs' Investment Commission, she added.
In regulatory terms, it is almost impossible to block bids from buyout funds. Any new defensive measures would require inter-departmental consensus within the Cabinet, Susan Chang said.
AIR SUPPORT: The Ministry of National Defense thanked the US for the delivery, adding that it was an indicator of the White House’s commitment to the Taiwan Relations Act Deputy Minister of National Defense Po Horng-huei (柏鴻輝) and Representative to the US Alexander Yui on Friday attended a delivery ceremony for the first of Taiwan’s long-awaited 66 F-16C/D Block 70 jets at a Lockheed Martin Corp factory in Greenville, South Carolina. “We are so proud to be the global home of the F-16 and to support Taiwan’s air defense capabilities,” US Representative William Timmons wrote on X, alongside a photograph of Taiwanese and US officials at the event. The F-16C/D Block 70 jets Taiwan ordered have the same capabilities as aircraft that had been upgraded to F-16Vs. The batch of Lockheed Martin
GRIDLOCK: The National Fire Agency’s Special Search and Rescue team is on standby to travel to the countries to help out with the rescue effort A powerful earthquake rocked Myanmar and neighboring Thailand yesterday, killing at least three people in Bangkok and burying dozens when a high-rise building under construction collapsed. Footage shared on social media from Myanmar’s second-largest city showed widespread destruction, raising fears that many were trapped under the rubble or killed. The magnitude 7.7 earthquake, with an epicenter near Mandalay in Myanmar, struck at midday and was followed by a strong magnitude 6.4 aftershock. The extent of death, injury and destruction — especially in Myanmar, which is embroiled in a civil war and where information is tightly controlled at the best of times —
Taiwan was ranked the fourth-safest country in the world with a score of 82.9, trailing only Andorra, the United Arab Emirates and Qatar in Numbeo’s Safety Index by Country report. Taiwan’s score improved by 0.1 points compared with last year’s mid-year report, which had Taiwan fourth with a score of 82.8. However, both scores were lower than in last year’s first review, when Taiwan scored 83.3, and are a long way from when Taiwan was named the second-safest country in the world in 2021, scoring 84.8. Taiwan ranked higher than Singapore in ninth with a score of 77.4 and Japan in 10th with
SECURITY RISK: If there is a conflict between China and Taiwan, ‘there would likely be significant consequences to global economic and security interests,’ it said China remains the top military and cyber threat to the US and continues to make progress on capabilities to seize Taiwan, a report by US intelligence agencies said on Tuesday. The report provides an overview of the “collective insights” of top US intelligence agencies about the security threats to the US posed by foreign nations and criminal organizations. In its Annual Threat Assessment, the agencies divided threats facing the US into two broad categories, “nonstate transnational criminals and terrorists” and “major state actors,” with China, Russia, Iran and North Korea named. Of those countries, “China presents the most comprehensive and robust military threat