Fortis researcher looks into Taiwan

Tan: We believe that some Taiwan banks have attractive valuations. We like, for example, Chinatrust Bank (中國信託), which is trading at 1.5 times price to book which is not terrible vis-a-vis Hong Kong banks which usually trade around 3 and 3.5 times on price to book basis.

I know that the quality of banks are different. But then you have banks like Chinatrust, which are responding to the competitive challenges of the marketplace and becoming much more IT-equipped to deal with customer-oriented service. Paying 1.5 times multiple for these banks are not too demanding.

TT: In terms of portfolio management, how much do you recommend investors put in IT and how much in defensive stocks such as banks?

Tan: It is too high-risk to go purely IT at this level. If you buy 100 percent IT, then the market falls further, and you have no room to buy more. What I would suggest currently is around 70 percent weighting in technology stocks -- because the market average weighting is around 55 percent.

So you might want to put 60 to 70 percent of your portfolio in IT with the remaining being spread between the banking sector, in which we would encourage you to put around 20 percent, and the rest in consumer and cyclical stocks.