Sharp declines in global bourses are likely to drag down the TAIEX today on its first trading day after the Lunar New Year holiday, but some sectors might be more resilient than others, analysts said yesterday.
"Since the TAIEX is likely to follow the tumble of US and other Asian markets during the holidays, we suggest that investors refrain from stock purchases upon the resumption of trading," JF Asset Management Co (
Marbo Securities Consultant Co (萬寶證券投顧) analyst Winson Wang (王榮旭) predicts a 2 percent to 3 percent tumble for the TAIEX today.
However, "although electronic shares -- which are highly reliant on the US market -- are likely to bear the brunt of selling pressure, we believe stocks related to tourism or commodities such as steel, petrochemical and bulk freighters, or those rich in real-estate assets will be more resilient," he said.
The weaker-than-expected performance reported in the US Institute of Supply Management (ISM) non-manufacturing index last month painted a gloomy picture for global economies.
The ISM's services index came in at 41.9 last month, the first time to fall below 50 since March 2003, indicating a sign of recession.
In response, the Dow Jones Industrial Average dropped 370.03 points, or 2.9 percent, to close at 12265.13 on Feb. 5. Standard & Poor's 500-stock index fell 3.2 percent and the NASDAQ Composite Index shed 3.1 percent.
The Dow lost 4.4 percent at the close of last week while the S&P fell 4.6 percent and the NASDAQ ended down 4.5 percent.
IBT Securities (
Hong Kong's Hang Seng Index declined 853.35 points, or 3.64 percent, to close yesterday to 22,616.11. Japan's Nikkei Index fell 189.91 points, or 1.44 percent, to close at 13,017.24.
"Since the local market was closed over the past six trading days for the Lunar New Year holidays, it has yet to reflect the mayhem on the global markets," Hsueh said.
Though investors may be tempted to take refuge in traditional industries that are likely to benefit from the rising prices of commodities, farm products, and precious metals, it is still safer to minimize overall exposure by increasing the percentage of cash in their portfolios, he said.
"Hold on to your cash," Hsueh said. "It is too early to talk about bottom-fishing right now, as visibility of a rebound on the economic front is still low."
Also see: Asian stocks fall on growth concerns
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