The stock market ended 2004 with a small gain yesterday, led by heavyweight Cathay Financial Holding Co (
"The central bank's decision to raise interest rates by 0.125 percentage point prompted expectations of a rise in profit margins for the financial sector," said Henry Miao (
"Insurance shares appeared to be the biggest beneficiaries," he said.
Cathay Financial, Taiwan's biggest financial holding company and insurer, advanced 1.56 percent to NT$65.
The benchmark TAIEX edged 38.83 points higher, or 0.64 percent, to 6,139.69 points, hitting a seven-month high since May.
The index climbed 4.23 percent for the whole of last year, weighed down by skyrocketing oil prices and political unrest stemming from the presidential election.
The yearly increase represented a lukewarm gain, compared with the 32-percent gain for 2003.
"The strong performance on the last trading day of 2004 should buoy investors' confidence for a bullish January," Miao said.
He also expected overseas fund managers to continue purchasing Taiwan's equities, as they played a key role in pushing higher the local stock market.
Foreign investors bought a net of NT$8.3 billion (US$261.5 million) worth of local shares yesterday.
Chien Po-yi (簡伯儀), a deputy manager of Jih Sun Securities Investment Consulting Co (
"We expect persistent global demand for steel and cement, as well as merger talks among financial holding companies, to keep moving the stock market," Chien said.
The TAIEX has a good chance of approaching 6,500 points this month, breaching the 10-year-average of 6,400 points and tracking the record over the past 16 years, Chien said.
Last year, raw-material shares such as steel makers outperformed the major index, largely as a result of China's voracious demand, a reverse of the trend of electronics usually taking the lead, he said.
Looking ahead, Chien warned that demand for cement and steel could slacken in the year ahead owing to Beijing's persistent measures to curb its overheating economy.
Shares of China Steel Corp (中鋼), the nation's largest steelmaker, lost 1.65 percent to NT$35.8 on the Taiwan Stock Exchange yesterday after a media report that dwindling demand will transform China into a steel exporter from a heavy importer amid growing output.
Suppliers of raw materials, along with the financial sector, will still outpace electronics shares in the first half of the year, playing a major role in driving the TAIEX, Chien said.
He added that the semiconductor and flat-panel industries, which are plagued by overcapacity problems, may enjoy a full turnaround in the second half.