Analysts upbeat on Taiwan shares for Q4

The China Post news staff

TAIPEI, Taiwan — Many securities analysts have turned more bullish on the Taiwan stock market after share prices chalked up the biggest monthly gain of the year in September.

The most optimistic analyst predicted the weighted price index could soar to around 9,600 points while at least one cautioned that it might slide to the neighborhood of 7,500 points if the ruling Kuomintang loses in the upcoming election at Taiwan’s five special municipalities in late November. The analysts cited the continuing domestic economic recovery, positive effects from the economic cooperative framework agreement (ECFA) signed with China, the rise in Taiwan currency, and inflow of international capital among factors for the surge in share prices led mainly by manufacturing enterprises last month.

The local stock market is seen to continue benefiting from these factors plus positive policies and measures expected to be announced by the government ahead of the elections of five municipal administration chief and city councils on Nov. 27. Many of the analysts believed that the weighted index is most likely to stay above the 8,000-point level and climb up to about 8,800 points during the final quarter of the year.

Electronics shares covering notebook PCs, network communications gears and flat panels for PCs, TV sets and mobile phones will lead the charge in view of the approach of the Christmas shopping season while shares of companies with close business ties to the Chinese market and financial service will also move up, they said. Some analysts pointed to shares related to domestic consumption needs that will be driven by improved employment and fervent election campaigns

Hu Li-yang was the most upbeat among the well-known analysts. He said the share price index will have chance to shoot up to the level of 9,600 points in three to six months if it manages to surpass the 8,400-point level. He pointed out that capital from North America and Europe has started its way to the Asian market and the momentum could last for about four months and may even persist for as long as 24 months. But the more prudent ones offered some notes for caution, including negative political developments if candidates of the ruling KMT are defeated by the opposition Democratic Progressive Party in the November election, which will be seen as a bellwether for the 2012 presidential election.

Investors should also monitor closely other factors that will possibly sway the Taiwan market, another rise in interest rate, if the United States will designate China as a nation manipulating exchange rates for its currency, the forthcoming meeting of the Chinese leadership, and the next round of meeting between the top negotiators from the two sides of the Taiwan Straits in the fourth quarter.