The stock market is likely to slump until the political dispute over the result of yesterday's presidential election is resolved, analysts said.
"While investors were at first expecting a bull market after the presidential election was completed yesterday, it ended up creating even more uncertainties for investors," said Jones Wang (
"If the dispute is not cleared up before the market opens on Monday, the TAIEX will definitely decline," Wang said.
PHOTO: TAIPEI TIMES
Following the Democratic Progressive Party's (DPP) narrow victory, the opposition alliance immediately came out and claimed that the poll was "unfair" and that the party will file an appeal to nullify the vote.
Such a move is likely to paralyze stock investors tomorrow as they await a final decision on the poll, Wang said.
If the DPP's ticket is confirmed as the winner, finance and pan-green stocks that were depressed prior to the poll may surge in celebration, Wang said. Investors are likely to dump air carriers and pan-blue related stocks that they has originally snapped up based on anticipation that the pan-blue camp would win, he added.
Transportation stocks led the TAIEX with a total rise of 3.77 percent on Friday, while financials saw a decline of 0.91 percent -- the largest drop in any sector on the bourse.
The benchmark index rose 28.06 points, or 0.41 percent, to close at 6,815.09 on the eve of the poll.
While Wang was hesitant to comment how foreign investors would react to the sudden turn of events, William Lin (
"The political question is going to impact the market and weigh on investor confidence," Lin said.
Dark clouds, including after-shocks following an attempted assassination of President Chen Shui-bian (
"After all the chaos, investors will eventually go back to looking at fundamentals," said Dave Chou (
High-tech, finance, and raw-material stocks may continue to lead the market throughout the year, Chou said.
As finance and raw-material shares have enjoyed a considerable bounce since January. And the high-tech sector, especially semiconductor manufacturers, are expected to rebound in the second quarter, he said.
Transportation shares may gradually rise as shipping rates continue to surge, Wang said.
Shares of China Airlines (
One analyst who asked not to be named, however, said that all signs point to a bullish outlook for the TAIEX, but that a DPP victory could restrain transportation shares as questions over cross-strait links remain unanswered.
"The market is highly sensitive to cross-strait issues," he said. "Chen's less-friendly cross-strait policies will press on the growth curve."
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