Rollercoaster ride forseen for stock market this week

Stock prices are likely to rebound this week from panicky sales over terrorist blasts in Greece last week, but the rise driven by improved corporate fundamentals may be just moderate as political uncertainty lingers, market watchers said yesterday.

The TAIEX plunged nearly 5.4 percent last Wednesday as terrorist bombings in Athens triggered a record NT$10.62 billion sale on a single day by overseas fund managers.

"With the unfavorable factor disappears, the TAIEX will be a rollercoaster this week with volatile bounces as political concerns return to haunt investors," said Jones Wang (王源錦), a deputy manager with ABN-AMRO Asset Management in Taipei.

The government is set to launch a 10-day recount of the presidential election ballots beginning today.

Wang expects the benchmark TAIEX to shortly return to the 6,300-point level it was before stock prices tumbled nearly the daily-limit 7 percent on the first trading session after President Chen Shui-bian (陳水扁) won a second term.

Wang suggests investors snap up technology shocks such as memory chipmakers and flat-panel display makers when the index hits the lows around 5,800 points.

Last week stock prices fell 1.27 percent to 6,040.26 points from 6,117.81points after a strong 2.21-percent jump on the final session to offset the heavy sales on fears of spreading terrorist attacks.

Foreign investors sold a total of NT$28.5 billion last week.

"Despite the likelihood of a rebound, overseas fund managers, which hold a one-fifth share of Taiwanese stocks, are cautious of increasing their Taiwanese stocks prior to President Chen's May 20 inauguration speech," Wang said.

Kevin Chung (鐘國忠), an analyst at Jih Sun Securities Investment Consulting Co (日盛投顧), said "local investors overreacted to [the Athens terrorism explosions] last week and resulted in panic sales."

But Chung did not see a steep upturn soon as Chen's speech is expected to overshadow the local bourse in the next few trading sessions.

"The stock prices have already stop shedding, but I haven't seen aggressive buying yet as the earnings season winds down," he said.

As a result, the TAIEX is likely to bounce back slightly later this week before the political uncertainty vaporizes, Chung said.

Taiwan Semiconductor Manu-facturing Co (TSMC, 台積電) shares will be the barometer, as the world's biggest supplier of made-to-order chips is set to hold its annual shareholder's meeting tomorrow, which may lead to the rise of the TAIEX.

TSMC shares rose 2.7 percent, or NT$1.5, to NT$57 a share on the broader market, last Friday.

TSMC said earlier that first-quarter earnings quadrupled to NT$18.79 billion, or NT$0.93 a share, from a year ago, on higher revenue of NT$57.51 billion.

Meanwhile, the ballot recount will also put downward pressure on the new Taiwan dollar over the short term, local foreign exchange bank sources said yesterday.

The sources said that unless the US stock market registers a sharp increase during today's trading leading to a rise in Taiwan's stock market, the downward trend of the NT dollar is expected to continue.

The NT dollar stood at 33.313 to the greenback on Friday, up slightly from 33.369 a week earlier, and it is expected to be in the range of 33.2 to 33.5 to its US counterpart during the next week.