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Equities to continue rise, analysts say

The nation's equity market is expected to continue its recent momentum and strengthen in the second half of this year, with the benchmark index likely to hit 9,000 points, led by high-tech stocks, anticipated capital backflow and robust foreign investment, analysts say.

"As the traditional peak season is approaching, we expect the previously laggard high-tech firms to play as locomotive stocks and lead the TAIEX higher," George Hou (侯明甫), managing director and chief investment officer at JF Asset Management (Taiwan) Ltd, told a media briefing yesterday.

Rumors of mergers and acquisitions, as well as strategic partnerships or investments by private equity firms, would continue to stimulate high-tech stocks in the future, Hou said.

The TAIEX rose 38.17 points, or 0.46 percent, to close at 8338.88 on turnover of NT$133.91 billion (US$4 billion) yesterday, with about three of the benchmark's constituents climbing for every two that fell.

Foreign investors bought a net amount of NT$3.42 billion worth of shares yesterday. Overseas investors have purchased NT$23.18 billion net since the beginning of this month, the Taiwan Stock Exchange's data showed.

Hon Hai Precision Industry Co (鴻海精密) added NT$1.50, or 0.6 percent, to NT$255.50 yesterday after the Chinese-language Commercial Times reported the company will start shipping 32-inch liquid-crystal-display televisions to Sony Corp next month, and is in the process of getting its 40-inch model certified by Sony.

Fubon Securities Investment Services Co (富邦投顧) said it expected the TAIEX to soar to between 8,800 and 9,000 by the end of this year.

The forecast is backed by continuous net foreign investment inflow, amounting to US$49.5 billion over the past two-and-a-half years, a possible backflow of overseas Taiwanese capital on recovering political environment and the cheap valuations of local stocks, Fubon Securities Investment president Hsaio Chien-hsiang (蕭乾祥) said at a seminar last Wednesday.

Similarly, Citigroup Inc raised its forecast for the TAIEX in 12 months to 9,550, up from 8,450, saying earnings are improving and shares are relatively cheap after trailing gains elsewhere in Asia.

The measure is up 6.6 percent this year, while the Morgan Stanley Capital International Asia-Pacific Index has risen 7.4 percent.

Financial stocks yesterday appeared weak with the financial sub-index dropping marginally by 0.04 percent after the Legislative Yuan approved the controversial personal bankruptcy law last Friday, the first legislation of its type in the nation, which sparked concerns that consumer credit abuse storm may re-emerge.

"We do not expect a huge impact on local lenders following the removal of some highly disputed clauses from the final version of the law," Fiona Uang (汪姵吟), an analyst who tracks Taiwan's financial sector at Mega Securities Corp (兆豐證券), told the Taipei Times in a telephone interview over the weekend.

The controversial clauses included the exemption of debtors who claimed bankruptcy from repaying the principle amount on housing mortgages for six to eight years without risking their residences being auctioned.
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