TAIPEI: Taiwan's top financial regulator and the Taiwan Stock Exchange Corp (TWSE) have dismissed speculation that the prices of Taiwan Depository Receipts (TDRs) issued recently by overseas companies have been artificially jacked up.

Discrepancies were seen not only in the prices of TDRs and their original shares listed on markets outside Taiwan, but also in the prices of American Depositary Receipts (ADRs) issued by Taiwan Semiconductor Manufacturing Co (TSMC) and United Microelectronics Corp (UMC) and their original shares listed on local bourse, Financial Supervisory Commission (FSC) Chairman Sean Chen commented Wednesday.

However, this is a normal phenomenon, he noted, saying that it had resulted from discrepancies between supply and demand in each share market and different valuations of the TDR's future price-to-earning ratio.

The commission will collaborate with TWSE and the Taiwan Securities Association to develop means of easing the potential price hike of TDRs by maintaining a balance between supply and demand, FSC Vice Chairman Wu Tang-chieh said.

Meanwhile, a TWSE spokesman said that it is common to raise funds by issuing depository receipts and that the issuance of TDRs is still in its early stages.

According to TWSE's statistics, as of the end of last month, five firms operated by overseas Taiwanese businessmen - Want Want China Holdings Ltd, Ju Teng International Holdings Ltd, New Focus Auto Tech Holdings Ltd, Yorkey Optical International (Cayman) Ltd, and Vietnam Manufacturing and Export Processing Holdings Ltd - had raised a total of NT$7.1 billion ($220 million) through TDR issuances.

The scale of TDR issuances is still small compared with that of the ADRs listed by 26 companies on the New York Stock Exchange and the NASDAQ Stock Market, which raised more than $7.5 billion (approximately NT$250 billion) this year, the statistics show.

China Daily/CNA

(HK Edition 12/11/2009 page2)