How to understand full delivery stocks? A must-read risk guide for investing in Taiwan stocks

Full Settlement Meaning and Risk Warning

In the Taiwanese stock market, full settlement stocks refer to stocks that require full payment or settlement upon purchase, which is not the usual trading method for regular stocks. When a listed company’s operating difficulties, financial crisis, or major violations cause its net asset value per share to fall below 5 yuan, the exchange will classify it as a full settlement stock.

Compared to regular stocks, full settlement stocks face significantly higher risks. First, companies listed as full settlement stocks usually already have operational or financial problems, indicating an elevated investment risk. Second, these stocks are highly volatile, especially when their share price fluctuates near the critical value of 5 yuan, requiring investors to exercise extra caution. Lastly, full settlement stocks do not pay dividends nor offer rights issues; investors can only wait for the company to turn around and return to regular stock status.

Liquidity Challenges of Full Settlement Stocks

Lack of liquidity is another major characteristic of full settlement stocks. Since transactions occur only once every 30 minutes and market participation is low, many times there is no one to take the other side of the trade, leading to wider bid-ask spreads and high transaction costs. This means that even if investors want to exit promptly, they may face difficulties.

Is There a Chance to Resume Normal Trading?

Being classified as a full settlement stock is not a permanent judgment. When the company’s operating condition improves and certain conditions are met, it may have the opportunity to be removed from the full settlement restriction:

Listed companies need to meet: Two consecutive quarters with net asset value per share exceeding 5 yuan, and shareholder equity continuously above 300 million yuan.

OTC companies need to meet: A single quarter’s financial report showing net asset value per share over 5 yuan, and an increase in shareholder equity.

Once the conditions are met, the Taiwan Stock Exchange will review on the first working day after receiving the quarterly reports, and the removal will take effect two days after announcement, allowing the stock to resume normal trading as a regular stock.

How to Check and Identify Full Settlement Stocks

To find out the current list of full settlement stocks, you can log in to the Taiwan Stock Exchange official website, select “Trading Information” → “Change Trading,” where you can see the complete list of full settlement stocks and their latest status.

Buying and Selling Process for Full Settlement Stocks

Since credit trading tools such as margin trading and short selling cannot be used, the trading process for full settlement stocks is entirely different from that of regular stocks.

Buying process: Investors must first transfer all funds, including handling fees, to the broker’s designated account before placing an order through a broker. Due to potential insufficient funds, they usually transfer a slightly higher amount to ensure execution. Any unused funds will be returned to the individual account at 3:30 PM.

Selling process: Investors need to contact their broker to apply for stock reservation (pre-collection of stocks). The broker will confirm via recording (some brokers allow application through an app). After approval, investors can place sell orders themselves. If the order does not execute by market close, they must re-reserve the stocks the next day.

Recommended Brokers for Full Settlement Stock Trading

Several brokers in Taiwan offer services for trading full settlement stocks. Here are some popular options:

Fubon Securities — One of Taiwan’s largest securities firms, with a comprehensive online trading platform and rich investment tools, supporting full settlement stock trading.

Yuanta Securities — The broker with the most branches, offering mobile order placement and cloud synchronization, with professional support for full settlement stocks.

CITIC Securities — With extensive experience in financial markets, providing professional investment advisory services, supporting full settlement stock trading.

KGI Securities — An established broker with convenient account management features, supporting full settlement stock trading.

Risks and Precautions Investors Must Understand

The risk level of full settlement stocks is clearly higher than that of regular stocks, mainly in four aspects:

First, high operational risk. Stocks classified as full settlement stocks usually reflect companies with poor management, financial difficulties, or suspected violations. Investors need to recognize that these are high-risk targets.

Second, extreme price volatility. Especially when the stock price hovers around 5 yuan, market uncertainty about their trading classification can cause sharp fluctuations. If a company is converted to a full settlement stock, its price may even hit the daily limit down repeatedly.

Third, zero income characteristic. Unlike regular stocks, full settlement stocks do not pay dividends or rights issues during their period of suspension; the only profit opportunity is waiting for the company to turn around its operations.

Fourth, severe market liquidity shortage. The 30-minute transaction cycle, combined with low participation, makes it difficult for buyers and sellers to match quickly, making trading much more difficult than with regular stocks.

Overall, the meaning of full settlement stocks is “high risk, high threshold, low liquidity,” suitable only for investors who fully understand the risks and have patience to wait.