Despite recent instability in Taiwan's benchmark stock index, Morgan Stanley Dean Witter (MSDW) demonstrated its confidence in the market by officially opening its first branch office in Taipei yesterday.
Waving off the recent turmoil as short term "market fluctuations," MSDW chairman and CEO Philip Purcell said his company is bullish on Taiwanese innovation and technological prowess.
"I don't share any negative thoughts today about the Taiwan market over the long haul," Purcell said. "I think investors have learned that buying and holding good stocks, particularly innovators, has been a very sound investment strategy."
He pointed to the future role of technology worldwide in the "new (Internet) economy" and the demand for Taiwan-made information technology (IT) products to fit this environment and assured that, "the new economy is all positive for Taiwan." According to local analysts who requested anonymity, the news of MSDW's new Taipei office will not bring confidence to the falling stock market. Although the New York-based company is one of the world's largest investment firms, it began operating in Taiwan two months ago after being licensed as a foreign institutional investor.
"There's really no relationship between them coming in and the market," said one analyst. He added that on a daily basis, foreign institutional investors in the market only account for between 6 and 8 percent of activity. Retail investors account for 85 to 90 percent.
He said Taiwan's regulations limit foreign investment houses to a maximum US$1.2 billion in the local market. In addition, foreign firms in general are only allowed by law to own 50 percent of a Taiwanese listed company.
Meanwhile, Purcell also met with President Chen Shui-bian (陳水扁) yesterday to discuss a range of issues. Purcell said his confidence in Taiwan in general stemmed in part from "good governance" and the " very orderly transition from one government to another."
For the future, Purcell expects opportunities in the local stock market to grow. "We clearly expect this market to expand, or we would not be making the investments that we are making."
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