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Stocks may hit 8,000, despite NHI disincentive

The weighted stock index TAIEX, which closed at 7,715 Friday, is expected to hit 8,000 by the end of the year despite the government's decision to take a portion of certain investors' stock dividends to boost the national health insurance (NHI) system, experts said yesterday.

“The move by the Department of Health is expected to create a psychological impact on investors, who might be more unwilling to take part in stocks' ex-rights and ex-dividends next year,” said Wu Huo-sheng, chairman of Taishin Securities Investment Advisory Co., adding the new measure will have a bigger impact on individual investors than on institutional investors, who are excluded from the new system.

“Yet in the long term, the negative impact will dissipate,” he said.

As for the fourth quarter, market fundamentals will continue to improve, although a correction is still expected due to the fact the TAIEX has risen some 500 points over the past month, he said.

All in all, the TAIEX may hit 8,000 in the fourth quarter, driven by several positive factors including the launch of new electronic devices and rising orders expected for the final three-month period, he said.

Liu Kun-hsi, president with Masterlink Securities, said investors may feel somewhat uncomfortable with the new health insurance measure and send local stocks lower in the first part of October. Yet he urged investors not to worry as the measure's long-term impact will not be so grave.

The TAIEX hit a high of 7,789.39 on Sept. 25 and may fall to the 7,500 to 7,600 in October, he said. Investors should closely monitor price and trade volume to figure out the magnitude of the new measure's impact, he added.

Then, after October, the downbeat sentiment should give way to optimism on quantitative easing measures launched by Europe, the United States and Japan. Plus, the introduction of the iPhone 5 and other electronic products are also expected to lift the TAIEX to 8,000 during the fourth quarter, he said.

Chien Po-yi, researcher with Cathay Securities, said the new measure will create a more adverse effect on large-holding investors who will be likely to forgo stock ex-dividends and ex-rights next year. A short-term sell-off may be seen in October, yet various signs show a fourth-quarter rally will be possible and push the TAIEX to 8,000, he said.

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