The formal launch of the Jardine Fleming Value Growth Fund (
In addition to the Jardine Fleming fund, the Public Securities Investment Trust is set to launch its "Public Exquisite Fund" (
According to analysts, both the fund industry and many investors will be closely watching how much capital these low-priced stock funds will raise. Their reception will be an indicator of the enthusiasm quake-related stocks can generate.
The situation for the listed companies of many traditional industries before the earthquake had been one of neglect. But following last month's quake, the picture for those industries related to the reconstruction of the quake-hit areas has changed completely.
The sub-index for cement shares has risen over 30 percent since the stock exchange reopened last Monday. At the same time, the sub-index for steel shares has gone up over 13 percent. The surge these quake-related stocks will make will be partly dependent on the scale of the low-priced stock funds, which were highly promoted by the securities authority before the quake.
With four more asset replacement funds expected to be launched later, estimates of the total capital raised are already much higher than before the quake. Once the Fubon Overvalued Fund (
Most of the money invested by these funds in the traditional industry is likely to be for long term investment, so it will help to steady the stock prices of many listed companies against surges of heavy selling in the market from short-term traders or investors following the recent rally. As a result, the fund size of these low-priced stock funds will be very important in deciding the quake-related shares' prices over the next six months.
With Jardine Fleming's fund the first to enter this market, many analysts believe its chances of reaching its originally designated ceiling of NT$3 billion are very strong. The estimate is based on the capital-raising capability of the company and a recent focus of quake-related shares by stock investors. If, as the first low-priced stock fund, it does reach its ceiling, the other six funds will be looking to achieve much better results than had been estimated before the quake.
"The reconstruction and quake-related stocks will be the main stream of the Taiwan stock market in the near future," said Chiu Zi-Chang(
According to Chiu, the target for the best investment over the near term should be a focus on cement, steel and plastics. The electronics shares, he said, will be worthwhile investments in the long term.
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