Chunghwa ADR stumbles on the starting blocks

The abrupt withdrawal of a debut ADR for Chunghwa Telecom has surprised few given the large gulf between what international investors were willing to pay for the stock and what the Taiwanese government had been expecting to receive for it. Since early autumn, when the first stage of the privatization was launched at NT$104 ($3.24) per share, the company's share price, and with it the government's ambitions, have suffered a long and painfully sharp fall to current trading levels around the NT$77 mark (Tuesday's close).

For a government that had clearly found it hard to come to terms with such a harsh adjustment over such a rapid timeframe, the prospect of having to price an IPO at a discount for foreign investors proved too politically unpalatable to bear. Market observers consequently report that while it was willing to accept parity pricing to Chunghwa's NT$77 share price, it would not accept the indicative price range of NT$65 to NT$75 per share proposed by the deal's three lead managers Goldman Sachs, Merrill Lynch and UBS Warburg.