Stock prices are likely to rise today, the first day of trading after the nine-day Lunar New Year holiday, as rallies in global stock markets and positive earnings results from US technology firms might help boost investors’ confidence, analysts said.
Records show that the TAIEX has closed higher on the first trading day after the Lunar New Year holiday eight times over the past 12 years, indicating that the benchmark index has a good chance of rallying today, said Chen Hui-yi (陳慧宜), a fund manager at JPMorgan Asset Management (摩根資產管理).
BIG BOOST
“Major stock markets in the US and Europe were steady during the Lunar New Year holiday, giving the TAIEX some upside momentum on the first trading day following the break,” Chen said in a research note.
On Jan. 18, the last day of trading before the holiday, the TAIEX rose 12.61 points, or 0.17 percent, to close at 7,233.69, which meant the Year of the Rabbit ended 20.9 percent lower than it began, statistics from the Taiwan Stock Exchange (TWSE) showed.
It marked the 14th consecutive year for the TAIEX to close on a daily rise before the Lunar New Year holiday, according to the TWSE.
Willie Shih (石隆智), a fund manager at HSBC Global Asset Management (匯豐中華投信), shared Chen’s views.
Although Fitch Ratings cut the credit ratings of Italy, Spain and three other eurozone countries on Friday, Shih said the US stock market’s rally over the holiday would support the TAIEX over the next few days.
Domestically, recent political developments should also bolster the stock market, Shih said.
President Ma Ying-jeou’s (馬英九) decision to appoint Vice Premier Sean Chen (陳冲) as the country’s new premier would help boost stock prices, he said.
INTERVENTION
Sean Chen is also in charge of the National Stabilization Fund (國安基金), which announced another three-month intervention plan for the local stock market to bolster local shares after the Jan. 14 elections.
Sunny Chung (鍾兆陽), a fund manager at Allianz Global Investors Taiwan Ltd (德盛安聯證券投信), said that compared with the first half of this year, the TAIEX would have stronger upside momentum in the second half, as most economists expect the global economy to hit bottom in the first quarter.
In the coming weeks, Chung suggested investors buy stocks that would benefit from improving trade ties with China, such as those in the tourism industry, the food and department store sectors, and electronics stocks, which have better earnings outlooks.
Within the electronics sector, Chung said he preferred component suppliers to Apple Inc’s products and companies that assemble ultrabook computers.
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