Polaris Financial Group (
"We believe Taiwan's stock market will trend down in the first quarter, but it represents a good opportunity for investors to buy stocks at lower prices," said Cheng Yu-cheng (
Polaris Research expects the TAIEX to hit its lowest level in March at around 5,400 points, as Taiwan's economy may lose steam in the first quarter as a result of a weakening global economy and insufficient liquidity.
After that, the TAIEX may regain momentum to rise to 6,950 points by the end of the year, Cheng predicted.
Polaris listed several chipmakers as possible investment opportunities, as the semiconductor industry is expected to hit the bottom of the curve in the second quarter owing to excessive inventory problems.
Taiwan Semiconductor Manu-facturing Co (TSMC,
TSMC shares have fallen 5.4 percent to NT$48.2 yesterday on the Taiwan Stock Exchange since the beginning of the year.
"In other words, investors should bet their money now on companies with good prospects in the second half," Cheng said.
Makers of liquid-crystal display (LCD) panels also offer good investment prospects, as the sector may experience its worst period in the second quarter before recovering in the second half, said Molly Lin (
To secure stable returns, Lin advised investors to bet on industry leaders such as Taiwan's two largest slim-screen suppliers, AU Optronics Corp (
In addition to electronics stocks, raw material suppliers, such as steel millers, and transportation companies are also good investment targets after a heady 2004 brought about by voracious demand from China, Polaris Securities said.
"The growth may start to slow as a result of Beijing's attempts to curb its overheating economy, but we believe they will be able to sustain their strong profitability this year as prices will at least remain at a high level," said Peter Tzeng (曾耀德), an analyst at Polaris Securities.
Tzeng suggested that investors snap up small-volume stocks in traditional industrial sectors in the current quarter, as these stocks may come down a little bit from their heights last year.
For those looking for long-term and stable returns, Polaris Securities suggested buying financial shares, as more mergers and planned privatizations of state-run financial institutions this year will give a boost to the sector's profitability.