Largan share fluctuations trigger price stabilizing mechanism

Fluctuations in share prices of Taiwan-based smartphone camera lens supplier Largan Precision Co. (???) triggered a price stabilizing mechanism on the local main board Monday, leading to 22 brief trading suspensions for the stock in the morning session, according to the Taiwan Stock Exchange (TWSE).

The TWSE said that trading of Largan shares was suspended for two to three minutes 22 times before 10 a.m. after the exchange's price stabilizing mechanism found some irregularities in trading orders.

Under the current price stabilizing mechanism, as long as a price matching simulation system finds that a stock could rise or fall more than 3.5 percent after matching potential buyers and sellers on a trial basis, trading of the stock will be suspended for two to three minutes in the TWSE's call auction, where buy and sell orders are collected over a fixed period and are matched up at the end of the period.

In the early morning trading session, the price matching simulation triggered such a price stabilizing mechanism, the TWSE said, adding that it has launched an investigation into trading irregularities and that such brief trading suspensions are designed to avoid market speculation of any stock by certain investors, which could hurt other investors and even affect the broader market.

The investigation is still underway and has not yielded any results yet, according to the TWSE.

Market analysts said it is likely that some institutional investors wanted to push up Largan shares in a bid to lure other institutional investors to follow suit to chase prices, but those who boosted Largan shares in the first place would take advantage of the soaring share price to cut their holdings and lock in profits.

Before triggering the price stabilizing mechanism, the stock had continued its momentum from the previous trading sessions amid optimism toward the smartphone camera lens market's bottom line.

But, after its trading was suspended, Largan shares fell into negative territory and the weakness continued into the end of the Monday session, which dragged down the broader market, as the stock is the most expensive one in the Taiwan market.

Shares of Largan closed down 3.26 percent at NT$4,010.00 Monday on the main board, off an early high of NT$4,245.00, with 784,000 shares changing hands. Led by Largan's downturn, the bellwether electronics sector ended down 0.35 percent and the weighted index on the main board closed down 0.32 percent.

Before Monday's losses, Largan shares had soared about 9.65 percent in the previous two sessions after a U.S.-based brokerage raised a target price on the stock to NT$5,000 from NT$4,500. Largan's December sales, which hit a 13-month high, had also attracted strong buying in the two sessions.

Analysts said that the irregularities in trading of Largan shares prompted investors to pause, as they wanted to know the reason before parking more funds in the stock.

Source: Focus Taiwan News Channel