Thu, Mar 28, 2002 - Page 17 News List

Think small for big gains, investment analysts advise

THE MARKET According to Polaris, the highest returns can be found at small and medium-sized enterprises

By Joyce Huang  /  STAFF REPORTER

Investors looking for big returns in the stock market should think small, investment analysts said yesterday.

The TAIEX -- the nation's main stock index of mostly large capitalization companies -- has rebounded from lows reached last year, thanks to interest rate cuts, the low return on bonds and low price-earnings ratios.

But the biggest opportunities are not in the big-cap stocks, market watchers say. Investors searching for a place to park some money should look to small and medium-sized businesses, they say.

"Among all listed companies, stocks for small and medium-sized enterprises generate the highest returns," Lin Shau-dai (林孝達), chairman of Polaris Securities Group (寶來證券集團), said yesterday.

Lin was speaking at a seminar held by Taiwan Research Institute (台綜院).

Citing Polaris' latest surveys, the investment analyst noted that of the top 100 listed companies with the highest returns, 95 of those are small and medium-sized enterprises.

In addition, 82 of the top 100 firms with the largest profits after taxes are small and medium-sized enterprises, according to Polaris. So, too, are 95 of the top 100 companies with the highest earnings per share.

Though Lin didn't make any specific stock recommendations, he did highlight some sectors that investors should consider. Lin said emerging technologies and products -- such as digital cameras, broadband and wireless Internet equipment and biotechnology -- may soon become major supporters of the nation's economy.

Tery Huang (黃天然), president of Polaris, noted that the market for consumer electronics has continued to grow, especially for CD-RW, DVD-ROM and DVD players.

Huang added that sales of wireless LAN cards and Bluetooth devices should do well, in addition to digital cameras with 1394 and USB connectors. Also, flat panel monitors will come to replace their CRT counterparts, Huang said.

"Still, at the beginning of the economic turnaround, consumers will continue to demand low prices and high performance before replacing existing equipment," Huang said.

Also attending yesterday's seminar were Liu Tai-ying (劉泰英), chairman of China Development Financial Holding Corp (中華開發金控), and Lee Kao-chao (李高朝), advisor to the Council for Economic Planning and Development.

Liu and Lee said they were optimistic for the nation's economic outlook this year. Liu said Taiwan has started to recover, "which will last until next year and peak the year after next year." He also forecast GDP growth of no lower than 3 percent as orders from the US and China continue to rise.

Lee noted that manufacturing picked up last month and export growth should turn positive next month. Still, Lee said there were some areas of concern, such as private domestic investment, saying "a slow recovery is expected."

Private domestic investment last year dropped nearly NT$400 billion -- or 26.7 percent -- to NT$1.1 trillion, severely hurting economic growth.

Lee said it would be "mission impossible" to get back to 2000's level of NT$1.5 trillion.

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