Liao said any further downturn would be short-term, and its length would depend mostly on China's attitude. After political factors fade away, fundamentals will then take the market to where it should be, he said.
Peter Kurz, president of Merill Lynch Taiwan, agreed that the stock market may decline in the short term because of investor concern over cross-strait tension. Kurz, dubbed "Mr Taiwan" by local media, was quoted yesterday as saying that support for the TAIEX could be expected at around the 7,500 level.
Kurz said that investors must not worry too much about the political consequences of the election in terms of Taipei's relations with Beijing. He said Beijing might not react too strongly to the election result, while at the same time the US has expressed its concern over the Taiwan Strait situation.
Another analyst who sees a buying opportunity is Shei Shang-yuan (
Shei noted that, in the past, profits have been made by taking advantage of politically inspired sell-offs.
"Just review what happened after several incidents such as the 921 earthquake, Lee's state-to-state comment and the missile crisis before the 1996 presidential election," Shei said.
"Most foreign investors didn't sell their holdings during these incidents and they bought more stocks when the market dropped more. The foreign investors became the biggest winners when the market recovered later," Shei said.
"Therefore, I suggest that investors should buy after the market drops severely sometime next week."
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