Stock prices are expected to get little boost this week from Presi-dent Chen Shui-bian's (陳水扁) overtures for a resumption of cross-strait talks since no substantial plans were announced that might further lift investor's confidence, market analysts said yesterday.
As part of his efforts to thaw out the cross-strait stalemate, Chen used his Double Ten National Day speech to urge Beijing to return to the negotiating table to pursue a consensus over scrapping the long-standing ban on direct cross-strait transportation.
"Without giving fresh details, or a timetable, we believe Chen's remarks will have a neural effect on the stock market in the short term, as investors have in part factored in the president's favorable comments about direct shipping," said George Wu (
Chen had told reporters last week that he would deliver constructive comments about the Taipei-Beijing relationship, which had prompted speculation about an immediate lifting of the ban on direct transport links.
That optimism sent transportation shares rising on the benchmark Taiwan Stock Exchange in the past week, even though global crude oil prices soared to more than US$53 a barrel, Wu said.
China Airlines (
In the coming weeks, however, there is little room for transportation stocks to rise higher as investors realize that we are still several steps away from direct shipping, Wu said.
"But in the long run, the policy of relaxing the ban on direct cross-strait transportation will still provide a boon for the local shipping sector," Wu said.
The same will happen to the broader stock market, he said, adding that surging crude oil prices will once again become a major factor driving the local bourse.
The TAIEX is likely to seesaw within a narrow range around 6,100 points, after an almost 3 percent gain in the past week, said Kevin Chung (鐘國忠), a deputy manager at Jih Sun Securities Investment Consulting Co (日盛投顧).
The TAIEX advanced 156.81 points to close at 6,102.16 points on Friday from its Monday opening at 5,945.35.
"As Chen's remarks mostly match our expectations, we believe the stock market will gradually be left to market forces," Chung said.
In other words, investors might purchase more financial shares as local insurers and lenders are expected to reap bigger profits because interest rates on new polices will rise in line with the central bank's hikes on key interest rates by a bigger-than-expected a quarter percentage point last month, Chung said.
Cathay Financial Holding Co (國泰金控) Mega Financial Holding Co (兆豐金控) and Chinatrust Financial Holding Co (中信金控) are good investment targets, he said.