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TAIEX soars on `catch-up' buying spree

A man acting as the God of Wealth yesterday hands out candies to staffers of a Taipei securities company to bring good fortune on the first day of business in the new Year of the Pig. PHOTO: CHEN TSE-MING, TAIPEI TIMES

The stock market strengthened to a monthly high yesterday, driven by a buying spree on the first trading day of the Year of the Pig to catch up with rising regional markets during the Lunar New Year holidays.

The TAIEX soared 90.75 points, or 1.16 percent, to close at 7900.20 on turnover of NT$125.71 billion (US$3.81 billion) yesterday, the highest level since Jan. 25.

Foreign investors bought a net NT$8.09 billion of shares, including Taiwan Semiconductor Manufacturing Co (台積電) and Tatung Co (大同), while local institutional investors grabbed NT$1.76 billion of shares like Tatung and Kee Tai Real Estate (基泰建設).

"The rising momentum, as expected beforehand, helped the local bourse match neighboring markets which have been robust during the Lunar New Year holidays," said Alex Huang (黃國偉), Mega Securities Corp (兆豐證券) assistant vice president in a phone interview yesterday.

Due to a lack of significant bullish factors and expected profit-taking, the benchmark index is predicted to encounter pressure at around 8,000 points and fluctuate between that level and 7,600 points until the end of the first quarter, Huang said.

The analyst suggested investors "bottom fish" for stocks this quarter as the TAIEX is likely to surge above 8,000 in April, driven by better-than-expected seasonal growth in high-tech industry sectors, such as consumer integrated circuit suppliers and laptop component makers, in the traditionally slow second quarter.

Mega Securities retained its forecast that the benchmark index would peak at 8,800 points in the third quarter of this year.

Similarly, Bevan Yeh (葉獻文), a fund manager at Prudential Financial Securities Investment Trust Enterprise, said he expected the local equity market to perform better in the April to June period on rising sales of electronics due to new product-rollouts in the second half.

The Taiwan market has delivered the best yield worldwide, with an average 4.27 percent return last month, Yeh said, and he expected "foreign investors to continue to pump money into the rising local market throughout this year."

Construction stocks performed well yesterday, with the sector sub-index beating the aggregate benchmark index to rise as high as 4.75 percent, in the wake of Chinese-language reports about a property bonanza during the nine-day holiday and potential foreign investment in the local real estate market.

The Commercial Times said yesterday that property owners and developers sold NT$5 billion worth of new houses during the Lunar New Year holidays after reports that interested Hong Kong buyers were prepared to pour billions of dollars into the nation's already sizzling property market.

Despite this optimism, Huang appeared more conservative and said it was just a rebound of construction stocks and that he did not expect them to rise as much as last year owing to a possible slow-down in the real estate market.

Instead he recommended upstream high-tech suppliers, including IC design houses like MediaTek Inc (聯發科技) and Richtek Technology Corp (立錡).

Both Mega Securities and Prudential Financial like the look of China-concept stocks for longer-term investment, such as footware maker Pou Chen Corp (寶成), food manufacturer Wei-Chuan Foods (味全) as well as Formosan Rubber Inc (厚生橡膠) and Taiwan Fertilizer Co (台肥) that have rich property assets.

MediaTek and Pou Chen closed up 1.1 percent and 2.19 percent at NT$367 and NT$37.3, while Formosan Rubber almost hit the 7 percent limit-up at NT$24.85 yesterday.
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