Sharp Jumps After Scrapping Share Sale on Market Instability

(Bloomberg) -- Sharp Corp. jumped the most in 22 months in Tokyo trading after the electronics maker controlled by Foxconn Technology Group canceled plans to raise as much as 200 billion yen ($1.8 billion) in a public share sale.

The Japanese company, which had planned to use the proceeds to purchase preferred stock and improve its finances, cited market instability fueled by U.S.-China trade tensions. Sharp also retracted a full-year report related to the sale, it said in a statement Friday. The stock rose 15 percent to 2,700 yen at the close, the biggest advance since August 2016.

“The threat of dilution was one of the main reasons for the recent share price declines,” said Hideki Yasuda, an analyst at Ace Research Institute. “With that out of the way, it’s easier for investors to buy back in.”

Taiwan’s Foxconn took control of the company in 2016 and injected money for capital investments. The stock rose to a peak of about 5,000 yen last year before sliding over concerns of weaker demand for smartphones and displays that Sharp makes for companies, including Apple Inc. Of the 13 analysts tracking Sharp, 10 recommend selling the shares, according to data compiled by Bloomberg.

“Due to U.S.-China trade friction, the stock market has become more volatile, so to continue with the new share issue would not be beneficial to our shareholders and stakeholders,” Sharp said in the statement.

Just hours earlier, Foxconn Chairman Terry Gou posed for pictures with U.S. President Donald Trump at a groundbreaking ceremony for the Taiwanese company’s new facilities in Wisconsin, an endorsement of controversial “America First” trade policies that have riled financial markets worldwide. Tariffs Trump has threatened in trade disputes with China and Europe are raising investor concerns about the economic outlook.

Sharp had planned to spend 185 billion yen to buy back 200,000 preferred shares and retire the stock. The remainder of the proceeds were to be used on capital expenditures and research.

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