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TAIEX halts four-day decline

Shares rose yesterday on a technical rebound to end four days of decline, despite a continuing outflow from foreign investors.

The TAIEX rose by 106.50 points, or 1.45 percent, to close at 7,451.06, on turnover of NT$104.898 billion (US$3.18 billion). Risers led decliners 829 to 326, with 179 stocks unchanged.

Alex Huang (黃國偉), assistant vice president at Mega Securities Corp (兆豐證券), attributed the rebound to recovering Asian markets and softening Japanese currency that eased off concern over a capital pullback by foreign arbitrage investors.

He also cited positive sentiment in the market down to local investors' stabilizing response toward President Chen Shui-bian's (陳水扁) remarks about Taiwanese independence on Monday, resulting in a 2.4-percent gain in the tourism sector and a 2.3-percent rise in the construction sector.

`Unstable'

"However, since the international stock and foreign exchange markets remain in an unstable situation for the moment, the TAIEX is expected to fluctuate between 7,300 points and 7,600 points until the end of April," Huang said.

On the foreign exchange market, the New Taiwan dollar lost ground against its US counterpart yesterday, as foreign fund managers offloaded more of Taiwan's equities than they acquired in the four days through yesterday.

The local currency declined NT$0.071 to close at 32.970 per US dollar, on turnover of US$880.5 million at the Taipei Forex Inc.

Dealers said a 7.1 percent decline in the benchmark TAIEX between March 1 and Monday prompted speculation that foreign investors would keep taking their funds out of Taiwan.

Mega Securities anticipated that the Japanese yen would continue to strengthen by the end of the current quarter, as overseas Japanese companies wire money back to their home country in droves before the end of their fiscal year.

There were no strong signals indicating weakening industry fundamentals, and local stock markets could start a recovery in the middle of the second quarter, Huang said.

Sustainable?

Analysts said the technical rebound of the local market yesterday was mainly because of the positive regional markets such as Tokyo and Seoul. But whether the day's technically driven gains would sustain was hard to predict.

IBT Securities Co (台灣工銀證券) expected the TAIEX to consolidate, predicting it could bottom out near the 7,000-point mark during the April-June period, the brokerage said in a research note released yesterday.

IBT Securities recommended financial stocks as they could enjoy a recovery from bad consumer loans and weak consumption; asset plays and China-concept stocks that would benefit from rising asset value and the country's fast growing economy; and high-tech plays that could be boosted by the Vista and iPhone effects.

Investment picks included Cathay Financial Holding Co (國泰金控), Radium Life Tech Co (日勝生活科技), Uni-President Enterprises Corp (統一企業), Powerchip Semiconductor Corp (力晶半導體) and Largan Precision Co (大立光), the report said.
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