A tepid performance from the TAIEX is expected again this week as the nation's retail investors wait out the May 20 presidential inauguration.
Also keeping investors on the sidelines is an expected hike in US interest rates on May 16. Some analysts forecast that the US Federal Open Market Committee may raise key interest rates by as much as 50 basis points -- a move that could spell trouble for the technology laden NASDAQ and, thus, the TAIEX.
"A prudent course of action should be taken until May 20, Mr Chen Shui-bian's (
Taiwan International Securities Corp (
After falling 3.8 percent in the April 24 to April 29 period, the nation's main index slipped another 1.4 percent last week, or 120.22, to 8,657.13. The Over-the-Counter index dropped 3.5 percent to 261.98.
Analysts say the TAIEX is unlikely to dip below 8,250 -- the intra-day low for the nation's main stock index this year. Furthermore, they say, the four government-linked funds are expected to buy shares if the TAIEX drops below 8,500.
Persistent low daily turnover has kept the market subdued in recent sessions, and analysts say it won't break from its ongoing consolidation phase until daily volume surpasses NT$200 billion.
In addition, investors are likely to follow the cue of institutional and foreign investors, who pared back their holdings last month and currently show little interest in buying -- even though the TAIEX is off 15.1 percent from its 52-week closing high.
* Analysts say the nation's main index isn't likely to drop below 8,250 -- the intra-day low for the nation's main stock index this year. Government buying is likely to kick in if the index falls below 8,500
In April, there was US$1.15 billion in outward remittances, the first time in 19 months in which more US dollars left Taiwan than flowed in.
Fubon feted
Investors bid up shares of Fubon Bank (
The deal, which was formally announced Saturday after months of hints from Fubon executives, will see Citigroup taking a 15 percent stake in Fubon Group companies, which include Fubon Bank, two insurers and a securities firm.
Fubon Bank finished Saturday at NT$16.60, up NT$2.40 for the week, or 16.9 percent.
"The alliance will help Fubon Bank increase its competitive ability in many fields, including corporate and consumer bank-ing, investments, private banking and asset management," wrote Charles Yang, equities analyst for Taiwan International, in a research note released before Fubon officially announced the deal.
Yang favors Fubon Bank as a long-term "buy" with a 12-month price target of NT$27, or 15 times estimated 2000 earnings of NT$1.80 per share.
Among Fubon's strengths, Yang said, was its healthy first-quarter earnings, which came in at NT$793 million on a pre-tax basis. That represents a 102.3 percent climb year over year.
Furthermore, Yang likes Fubon Bank for its low 2.3 percent overdue loan ratio and its emphasis on consumer loans, which account for roughly 45 percent of its loan portfolio. Because of the higher interest rates charged customers, consumer loans offer banks better returns compared to commercial loans.
Yang also held out the possibility that Citibank may eventually increase its stake in Fubon bank to 50 percent -- a move that would further benefit shareholders.
RSS