ent remarks by overseas investors that they may purchase less stocks in the run-up to the Lunar New Year. Statistics released by the Cabinet-level Financial Supervisory Commission (FSC) yesterday suggested from Jan. 1 to 26, overseas investors remitted a total of US$1.714 billion to Taiwan, less than the US$2.767 for December.
As for stock purchases in January, the FSC said that, up to Jan. 26, overseas investors purchased NT$418.4 billion worth of stocks traded on the Taiwan Stock Exchange and sold NT$319.6 billion, translating into a net purchase of NT$26.8 billion.
As for over-the-counter stocks, overseas investors purchased NT$27 billion worth of stocks and sold NT$27.5 billion from Jan. 1 to 26, translating into a net sale of NT$500 million.
Since 1990, when Taiwan first opened securities trading to foreigners, overseas investors have remitted a total of US$132.256 billion to Taiwan, FSC said.
Lowered remittances to Taiwan in January suggested foreign investors' lack of enthusiasm for Taiwan stocks in the run-up to the Chinese New Year break, which will begin Feb. 17. Most Taiwan businesses will be closed for nine days.
As Taiwan enters the holiday period, individual investors have begun to sell their holdings to get cash for the break, according to Cheng Shu-fen, analyst with Merrill Lynch Taiwan.
"Just a short while ago the local benchmark index TAIEX almost hit the 8000 mark, yet that means investors should take precautions," Cheng said.
Cheng also urged investors to especially watch out for the government's cross-strait policies, political developments with regard to the year-end legislative elections and next year's presidential election, and a new employee bonus policy set to take effect in the bottom half.
Singaporean investors, meanwhile, are not interested in Taiwan stocks at the current price level, said Chin Wen-heng, head of Goldman Sachs' Taiwan operations, after meeting with Singaporean traders at the end of January. Taiwan stocks have been going through a rally since the third quarter of last year.
As for the timing to enter Taiwan's stock market, foreign investors offered different opinions. Merrill Lynch's Cheng said the right time is when the local benchmark index TAIEX drops to 7,200. BNP Paribas, on the other hand, said 7,400 is a good time.
Malcolm Wood, Asian strategic analyst for Morgan Stanley, gave a more positive outlook, saying Taiwan stocks will continue to do well this year, thanks to brilliant performances of Asian stocks that investors can expect for 2007.
Strong export surpluses generated by Asian nations, low interest and an upward trend for Asian currencies have caused foreign money to pour into the Asian market, driving up Asian stocks, he said.
Wood named five Asian nations/regions -- Singapore, Hong Kong, China, Malaysia and Taiwan -- whose stocks will do particularly well.
