Thu, Nov 04, 2004 - Page 10 News List

Investor optimism increases for near term, survey says

By Joyce Huang  /  STAFF REPORTER

The recent upturn in the stock market has excited Taiwan investors, with a poll showing they are more optimistic toward the market's momentum over the next three months, according to a bi-monthly survey released yesterday.

The Shih Hsin University's finance department and the Chinese-language Win Win Weekly (今周刊) have jointly conducted the poll of investor sentiment every two months since last December.

The latest poll found that the index of investor optimism increased from negative 41.52 in August to negative 8.31 points last month.

The index, which peaked in February to 107 points in positive territory, was pushed down to negative 28 points in June and further dropped to its lowest point yet in August.

The sentiment index moved in tandem with the benchmark TAIEX, which peaked at 6,916 points in February and then declined to a low of 5,352 in August before jumping to 5,772 early last month.

The survey also found that men are more optimistic than women, and that investors under 29 years of age have more faith in the stock market than the elderly.

High-income earners and highly-educated investors are also more optimistic than low-income earners and investors who received less education, according to the poll.

One noteworthy finding is investors' attitude toward the execution of stop-loss orders, said Kuo Min-hua (郭敏華), an associate finance professor at the university.

Investors usually place a stop-loss order to tell their brokers to sell shares if the price falls to a certain level, in order to prevent further losses.

The survey showed that 45 percent of respondents ran into losses because of their failure to place stop-loss orders in time, while 22.6 percent believed the establishment of a stop-loss point is the key to their investment gains.

The majority of investors, however, tend to go against the strategy of establishing a bottom limit that is recommended by stock professionals, said the weekly's president Andy Liang (梁永煌).

"Reluctant to acknowledge losses, many investors, who failed to either set up a stop-loss point or stick to the point, usually end up losing more money because they hold on to their money-losing shares," Liang said.

While investors showed positive sentiment for the next three months, the TAIEX has yet to bottom out, said Hwa Erh-cheng (華而誠), another economics professor from the same university, yesterday.

"The stock market is expected to hit its lowest point early next year," he said.

The survey noted that 11.6 percent of respondents expected the TAIEX to level off between 5,860 points and 6,138 points in the next three months, while 38 percent expected the benchmark to level off between 6,139 points and 6,696 points, while 25 percent believed the index will fall below 5,859 points.

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