Thu, Jul 29, 2004 - Page 10 News List

CSFB urges investors to buy local stocks


Credit Suisse First Boston (CSFB) said investors should raise their holdings of Taiwanese stocks and buy Taiwan Semiconductor Manu-facturing Co (TSMC, 台積電) because the shares are cheap and a slowdown in semiconductor growth may be priced in.

Regional money managers should raise their holdings in the nation's equities by 1 percentage point to 1.5 percentage point below Taiwan's weighting in the Morgan Stanley Capital International Asia-Pacific excluding Japan Index, Credit Suisse said in a note to clients dated yesterday.

CSFB also added TSMC to its model stock portfolio for Asia excluding Japan. Taiwan's weighting in the regional index is 9.16 percent, according to Bloomberg data.

Shares of TSMC and United Microelectronics Corp (UMC, 聯電), the world's two largest makers of made-to-order chips, have slumped 29 percent and 32 percent since their yearly highs, partly on concern technology-related demand may not keep pace with increasing production in coming months.

"At this point, we believe the semiconductor downturn will be shallow, and much of the negative news has already been priced in," said Manish Nigam, equity strategist for Asia, excluding Japan, at CSFB's brokerage unit in Hong Kong.

The increase in Taiwan's weighting is CSFB's first since it began reducing its "overweight" recommendation last October. It also reflects the brokerage's upgrades on TSMC and UMC, said.

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