Global stock slumps could spell bad news for the local stock market when it reopens today after an 11-day close for the Lunar New Year holiday, analysts said yesterday.
The TAIEX is unlikely to perform well as a number of declining international economic indicators point to a serious economic downturn, Wu Huo-sheng (吳火生), an executive vice president at Fubon Asset Management (富邦投信), told the Liberty Times (the Taipei Times’ sister newspaper).
Traditionally, the odds of the TAIEX seeing a rise after the New Year vacation would be 70 percent, as in the past 10 years the benchmark only ended lower on the first day after the vacation in 2001, 2003 and last year.
But indicators such as Wall Street, which declined for two consecutive days last week, could add uncertainty to the local bourse’s performance, Wu said.
He said the TAIEX would likely continue its correction around the 4,000-point level this month.
Credit Suisse’s Asia Pacific equity strategist Sakthi Siva also told the Central News Agency that that Asian markets, including the TAIEX, had yet to hit bottom as half of the world’s eight indicators, including the US’ Institute for Supply Management’s manufacturing index and the Organization of Economic Cooperation and Development’s leading composite indicator, would continue their downward trend.
Yeh Tai-hong (葉泰宏), a securities investment manager at Taiwan Life Asset Management (台壽保投信), shared a similar outlook, saying the US stock market, which is under pressure from bad economic data, would most likely cause the local bourse to experience slight gains or losses today.
Yeh said the TAIEX could see a solid rebound after the second quarter.
In the short run, he said traditional industries should outperform the electronic sector.
But Wang Chi-ming (王智民), equity head at Capital Securities Corp (群益證券), said the TAIEX could still see a slight rise today after closing higher before its 11-day close.
He also favored electronic shares, saying the sector could soon benefit from declining inventories and Beijing’s subsidies to rural provinces for the purchase of consumer electronic appliances, which were launched yesterday.
The Chinese policy could also benefit the nation’s panel makers while providing a boost to sales of low-priced laptops, or netbooks.
Taiwan International Securities (金鼎證券) said yesterday that global shipments of netbooks this year could more than double to 25 million units from last year’s 12 million.
Netbook concept stocks such as Acer Inc, Asustek Computer Inc (華碩電腦), Gigabyte Technology Co (技嘉科技) and Micro-Star International Co (微星科技) would greatly benefit from the emerging product, while contract manufacturers such as Quanta Computer Inc (廣達電腦) and Compal Electronics Inc (仁寶) would also see rising business, the securities brokerage firm said.