Wed, Oct 11, 2006 - Page 12 News List

Pundits expect TAIEX to consolidate

STABILIZING Market watchers said investment jitters appear to have calmed down as the shock from Pyongyang's nuclear test faded and the anti-Chen rally went smoothly

By Amber Chung  /  STAFF REPORTER

The benchmark TAIEX is expected to consolidate today after a five-day holiday as investor jitters, brought about by North Korea's nuclear test on Monday and domestic political unrest, gradually stabilize, market watchers said yesterday.

"We hold a neutral view on the market's performance [today] in the wake of the long weekend," Jason Huang (黃崇恩), assistant manager at UOB Investment Adviser (Taiwan) Ltd, said in a telephone interview yesterday.

A major sell-off in the local bourse is unlikely as Asian markets recovered yesterday after the shock from Pyongyang's nuclear test and the local rally seeking to oust President Chen Shui-bian (陳水扁) proceeded without incident on the National Day yesterday, he said.

The TAIEX closed 1.78 percent higher to 6,997.24 last Thursday ahead of a five-day holiday.

The benchmark has gained 0.52 percent since the beginning of this month, with foreign investors buying a net of NT$14.56 billion (US$440 million) during the period.

Local financial markets will resume trading today.

Huang predicted that the stock market would open flat and experience some selling pressure in the latter part of the trading session from overseas investors who may pull their money out of the region due to concerns over depreciating Asian currencies.

Huang expects the TAIEX to fluctuate between 6,800 points and 7,000 points today.

Another analyst said that the TAIEX is expected to rise to 7,200 points between the end of this month and the beginning of next month. That would be the period when high-tech firms are scheduled to announce their third-quarter financial performance.

"[It] could give some inspiring news that could stimulate the market," said Alex Huang (黃國偉), assistant vice president at Mega International Investment Services (兆豐國際投顧).

Political risks could continue to haunt the local exchange with the opposition parties' proposal to seek another presidential recall or to cast a no-confidence vote against the current Cabinet, Alex Huang said in a report released last week.

The cooling global economy and prospect of limited sales growth momentum for high-tech firms could create some uncertainty in the market, the report said.

On investment picks, both UOB Investment and Mega International favor personal computer-related stocks like notebook components supplier Catcher Technology Co (可成科技) and panel makers such as AU Optronics Corp (友達光電).

Investors seeking to diversify their investment portfolios can consider financial stocks like China Development Holding Corp (中華開發金控) and Chinatrust Financial Holding Co (中信金控), as well as China-concept stocks like Uni-President Enterprises Corp (統一企業), Taiwan's leading food maker, Mega International said.

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