Investors should buy stocks with high yields or blue chip companies before the local stock markets close for the Lunar New Year holidays, paving the way for an upswing, fund managers said yesterday.
The anticipation of an upswing is mostly backed by Taiwan's attractive evaluation among Asian markets by overseas fund managers, while local shares are trading at a record low price-to-earnings ratio of around 10 as opposed to rival Singapore's 14, analysts said.
On top of that, local corporations enjoy higher return on equity and the nation's central bank is likely to maintain its loose monetary policy, Eric Lai (
The forecast for a better TAIEX performance makes sense for investors wanting to increase their local share holdings, according to Lin. The local stock market is set to close on Thursday and trading will resume on Feb. 14.
"Companies with a respectable yield should be the first pick," Lai said. Next to that, blue chips in financial, electronics and traditional sectors will also be good targets, he said.
Telecommunications operators are seen as an indicator as they are often generous with cash dividends. State-run Chunghwa Telecom Co (
The annual cash dividend represents roughly a 7 percent yield, based on last week's closing price of NT$65.5 on the Taiwan Stock Exchange Corp, which is much higher than the yield of less than 2 percent from bank deposits.
Investors seeking higher returns, however, may shift their focus to electronics shares as there were more indications of a turnaround, said Bill Lan (
"It's safe to buy shares with good yields. But, not all of those shares will outperform the benchmark TAIEX this year," Lan said.
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