Moreover, buyers are likely waiting for the market to bottom out, and “manipulating share price increases will not necessarily help stocks stay up,” he said.
“Rather real buyers are more likely to stay on the sidelines if prices are artificially propped up,” he said.
Investment consultants used to advise clients to invest in “dividend stocks,” or stocks that offer high dividends, to weather the market downturn. But doing that right now would hurt rather than do a world of good, Chung said.
“Dividend stocks get hammered after their ex-dividend dates. They can go down 20 percent after a dividend is issued,” he said.
Many major investors would rather not receive the dividends and save on taxes, he said.
Not only are dividends a tax hassle, but for those who bought these stocks on margin, declines in the share price would mean margin calls.
It seems to be a lose-lose situation for dividend stockholders. On the other hand, Chung thinks it is actually not a bad idea to invest in dividend stocks after ex-dividend dates, and buy low.
Meanwhile, the management committee of National Financial Stabilization Fund, a mechanism that would entitle the government to finance NT$ 500 billion maximum from existing government-run funds and asking loans from banks to purchase shares in stock market, held its regular meeting yesterday.
It concluded that there was no necessity for the management committee to employ the mechanism to interfere in the stock market in the light of recent performance of the market.
The committee said the local market didn’t drop as sharply as global markets and is expected to rebound along with continuing improvement in cross-strait relations.
ADDITIONAL REPORTING BY SHIH HSIU-CHUAN
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