As the stock market plunges, it could be the time for investors to start bargain-hunting in the second half of the year, analysts said yesterday.
The TAIEX yesterday rebounded slightly -- by 55.56 points, or 0.95 percent -- to 5,909.79 on turnover of NT$112.2 billion.
The local bourse yesterday saw gainers exceed decliners 536 to 329, with 110 remaining unchanged. A total of 21 stocks closed limit-up and 38 limit-down.
"The rise was a technical rebound from irrational overreaction to the Athens bombing," said Calvin Chen (
The index shed 333.92 points to close at 5,854.23 on Wednesday, the lowest level so far this year, reacting to the explosion in Athens and the movement of Chinese warships in the Taiwan Strait.
The rebound appeared to be bolstered by late-session interventions by government funds in light of the hop of Mega Financial Holding Co (
"But government intervention may not help revive the market's confidence, as selling pressure came mainly from foreign investors," Wang said.
Foreign investors, who dumped a net of NT$3.04 billion worth of shares yesterday, have got rid of a net NT$21.8 billion worth of shares since the beginning of May, according to Taiwan Stock Exchange.
Selling-off by foreign investors will be an unstable factor in the TAIEX's performance today, Chen said, although share-dumping pressure by domestic investment trust investors and proprietary traders lessened yesterday.
Domestic investment trust investors and proprietary traders sold a net NT$904 million shares yesterday, down from NT$6.15 billion in the previous day.
Both analysts predicted the index would fluctuate between 5,800 and 6,000 points today. However, it would require as much as a turnover of NT$140 billion to get back to 6,000 points, Chen added.
Nevertheless, since the market is fundamentally healthy, investors could begin bottom-fishing for value stocks that have seen price-earnings ratios drop below ten, both analysts said.
Chip makers like Taiwan Semiconductor Manufacturing Co (TSMC,
Eyeing benefits from potential interest rate rises in the near future, financial stocks like Mega Financial and Chinatrust Financial Holding Co (
TSMC shares closed up 0.91 percent at NT$55.50 yesterday. AU closed up 3.91 percent at NT$66.5. Mega Financial rose by 3.32 percent to close at NT$21.8 and Chinatrust Financial stayed at NT$36.3.
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