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Laggard local market may see silver lining with bargain hunters: analysts

TAIPEI--Despite gains of almost 12 percent in 2013, the local market remains laggard compared with the markets in the U.S., Europe and Japan, which could prompt bargain hunters to buy into local shares as the new year starts, market analysts said Wednesday.

Zhong Zhao-yang, a fund manager of the Allianz Global Investors Fund Taiwan, said the country is one of the laggards among the global equity markets so it is possible that foreign investors will take advantage of its relatively low valuation at the beginning of 2014.

In 2013, the weighted index on the Taiwan Stock Exchange closed up 11.85 percent from a year earlier at 8,611.51 points, outperforming South Korea, China and Hong Kong.

However, the Dow Jones Industrial Average gained more than 26 percent in the past year, while the S&P 500 index rose almost 30 percent, the best performance since 1997.

Elsewhere, the Nikkei 225 index in Tokyo rose almost 57 percent in the year, while shares in Europe also posted strong gains, with the Dow Jones STOXX Europe 600 index up 17 percent year-on-year.

Zhong said that as the U.S. Federal Reserve decided to cut its monthly US$85 billion bond buying program by only US$10 billion from January, the market has perceived the Fed's move as a moderate change in its monetary policy.

He said that in the wake of such a positive lead, investors are expected to continue to pump funds into the global equity markets, including Taiwan.

Liu Xing-tang, a fund manager of the Yuanta 2001 Fund, said that as the local semiconductor sector has been in consolidation mode for some time, semiconductor foundry operators could lead the sector in staging a rebound when trading resumes after the holiday period.

Liu said he also favors solar energy and LED lighting-related stocks as demand and supply in solar energy products is tilting toward a balance and LED lighting prices have fallen to levels that are acceptable to consumers.

In the old economy sector, Liu said he prefers electric car component suppliers, as electric car vendors will launch new models in 2014.

However, JP Morgan Taiwan Best Selection Fund manager Yeh Hong-ru said investors should pay attention to whether turnover in the local market will expand to NT$80 billion (US$2.67 billion) or higher to help the index make a significant breakthrough.

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