Wed, Feb 16, 2005 - Page 10 News List

Overseas buying likely to continue to boost TAIEX

By Joyce Huang  /  STAFF REPORTER

Boosted by foreign buying, the stock market is slowly turning upward and the benchmark TAIEX is expected to hit the 6,500 point before the Lantern Festival next week, a stock analyst said yesterday.

"Taiwan's stocks are some of the world's cheapest shares, which makes now a good time for investors to bottom-fish," Hsieh Chin-ho (謝金河), president of the Chinese-language Win-Win Weekly (今周刊), said at an investors' conference yesterday.

The average price-to-earnings (PE) ratios of Taiwan's shares hit a record low of 12.4 at the end of January, while half of the top 10 Taiwanese listed companies' PE ratio also fell below 10, according to Hsieh.

"Under such circumstances, there's limited room for the TAIEX to decline this year," Hsieh said, adding that there will be higher returns and lower risks for future stock investments.

The TAIEX yesterday rose 9.99 points to 6,122.39. Hsieh projected the index will maintain a level of between 6,000 and 7,000 throughout this year.

In contrast to the enthusiasm of foreign investors, domestic investors appear more reluctant to buy stocks these days.

"They lack confidence in the market given its poor performance in the past few years," Hsieh said. "Capital outflows triggered by the presidential and legislative elections, as well as rising cross-strait tensions, negatively impacted the TAIEX last year."

Hsieh is bullish on the nation's stock and economic fundamentals for the next two years, citing cross-strait charter flights over the Lunar New Year holiday and Premier Frank Hsieh's (謝長廷) intention to adopt an open-door policy toward cross-strait direct links and business exchanges.

Another stock analyst, Jimmy Wang (汪潔民), president of Portfolio Strategy Securities Investments Consulting Co (運昇策略投顧), however, was not so optimistic.

Wang, who also attended yesterday's conference, said that the TAIEX's recent boom may end in May, once Morgan Stanley Capital International (MSCI) completes a re-weighting.

"Investors may decide to lock in profits and dump shares in May when MSCI raises Taiwan's limited investment factor to 100 percent," Wang said.

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