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Recent surge in stocks may continue: experts

The China Post news staff--The rally seen in Taiwan stocks recently is expected to continue in the short term due to increased market confidence, experts said yesterday.

They made the remarks after the local bourse last week closed up 0.82 percent, the third week in a row the TAIEX has closed higher.

On Friday, the weighted index closed up 19 points, or 0.24 percent, at 7,642.26, after moving between 7,631.63 and 7,672.92, on active purchases of electronic shares by investors. Trade volume on that day stood at NT$89.62 billion. European and U.S. stocks, meanwhile, gave a mixed performance in overnight trading Friday.

A rally has been especially strong for large-cap shares and high-price shares, said Lai Cheng-hung, fund manager with Prudential, who also mentioned that the proportion of electronic shares to the total has been rising.

“This has been a major growth driver for Taiwan stocks recently,” he said. “With Taiwan stocks' price-to-book ratio still below average, investors' active purchases after last month's lull, and an expanding trade volume, a rise of the TAIEX is expected to continue, as long as it stays above its yearly and quarterly averages of 7,450.”

Shih Sheng-yuan, a fund manager with Jih Sun, also expressed optimism that the rally may last till the middle of December, based on three factors. First, foreign investors have boosted their positions in the futures and options market, a move that bodes well for a rally in the stock market. Second, listed firms have given better-than-expected November results. Third, the government has been active in its effort to support the market.

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