Despite the recent stabilization in oil prices, it is unlikely that crude prices will return to their previous level in the next few years, thanks to continuous robust demand, BNP Paribas Private Bank said yesterday.
The French investment bank expects crude oil prices to stay at around US$60 a barrel on average next year, up from US$54 year-to-date, and US$42 last year.
The chance that oil prices will drop below US$50 per barrel in the next few years is slim, Alan Mudie, the chief investment officer at BNP Parias' Private Bank, told a media briefing in Taipei yesterday.
China's urbanization will continue to drive a long-term quest for energy, while supplies, which have been constrained by tight refinery capacity utilization, will not be able to catch up until after expansion, which will take years, Mudie said.
As of press time, crude oil for December delivery yesterday fell below US$60 per barrel to be traded at US$59.56 on the New York Mercantile Exchange.
Oil prices reached a high of US$70.85 a barrel on Aug. 30 after a series of hurricanes damaged US refineries.
Similarly, Swiss bank UBS AG predicted earlier this month that oil prices would hover above US$60 a barrel next year, in light of the nearly full-load capacity of oil-producing countries and refineries.
The trend is expected to last in 2007 until productivity levels improve, according to the Swiss bank.
BNP Paribas suggested keeping oil stocks for long-tern investment and gold exposure with a bet at US$525 for the next 12 months, on a potential correction at US$440 in the short term.
On equities investment, EU members, emerging markets in Latin America such as Brazil and Mexico in the raw material sector, and Asian countries -- excluding Japan -- could be fine picks, the French bank said.
However, "Taiwan has been a disappointing market to date" and one of a few down markets, in part because of concern over cross-strait relations as well as a lack of domestic buying and concern over financial sector, Mudie said.
The bank remains bearish about the weak local bourse, waiting for catalysts to emerge, despite a bunch of tempting valuation figures, including a predicted net earnings-per-share growth of 13 percent, and a forecasted dividend yield of 4.5 percent for next year, he said.
The TAIEX yesterday closed down 21.48 points at 5,717.28 on turnover of NT$56.97 billion. The TAIEX has plummeted about 6.6 percent since the beginning of this month on fears of a flu pandemic.
The stock market could be less glum this week, if key high-tech players, such as Taiwan Semiconductor Manufacturing Co (
The company said in August that it hoped to see the TAIEX reach an annual high this month, bolstered by the continuous inflow of overseas capital. However, in light of weakening market confidence, the company has revamped its viewpoints, Hou said.
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