International investors planning to buy local equity within the next 12 months said that Taiwan was their most favored market in the Asia-Pacific region, according to a survey released by Merrill Lynch yesterday.
"Taiwan is now our respondents' most favored market, reaching levels of interest last seen in September 2003," Merrill Lynch said, citing the results of a survey this month polling foreign fund managers in the Pacific Rim.
The number of fund managers who favor Taiwan increased 27 percent month-on-month. Taiwan is now the most favored market among the 12 in the Asia-Pacific region included in the poll.
The rating was up 7 percentage points since last month and was followed by China's 20 percent and Singapore's 17 percent, the survey showed.
Despite the local bourse's poor performance even after absorbing large foreign net inflows worth US$16.1 billion, the presence of private equity groups in Taiwan and rising expectations for an opposition victory in the presidential election in 2008 have buoyed investor sentiment, it said.
The TAIEX closed 0.65 percent higher at 7,648.35 yesterday, as market sentiment improved because of encouraging US housing market statistics and the Thai government's quick actions to withdraw some of its highly unpopular capital restrictions on Tuesday night.
Bargain hunters also emerged in the market to target technology stocks, especially panel makers, which boosted the market.
The Merrill Lynch survey said that India had become investors' least favored market this month, since its central bank decided to impose restrictions on excess liquidity and more tightening was expected.
India was followed by Australia and Thailand in the survey.
With foreign investors panicking and stock prices dropping drastically on Tuesday, the Thai government effected an abrupt policy turnaround on Tuesday night to scrap drastic measures it had announced only one day earlier to try to hamper appreciation of the baht.
"We are relieved and expect a rebound in the Thai stock market although not to the levels prior to the introduction of the unremunerated reserve requirement [URR]," Supavud Saicheua, economist at Phatra Securities Co, Merrill Lynch's business ally in Thailand, said in a separate report released yesterday.
Investors would take an increased risk into account on Thai equities since prior confidence that the stock market would be free from restrictions could not be restored, Saicheua said.
Merrill Lynch expressed their optimism for Taiwan's market last week, expecting the local bourse to become a potential regional leader next year, along with South Korea and Malaysia.
The possibility of improving cross-strait relations, coupled with a private equity boom and the rising profitability of high-tech players as well as expectation for rising returns on equity underpinned the Taiwan's bullish equity market, Merrill Lynch's Asia-Pacific strategist Spencer White said.
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