Stock experts upbeat, despite recent losses

Taiwan stocks fell yesterday after a tumble on Wall Street in overnight trading. TAIEX, the island's weighted index, dropped 93.57 points, or 1.21 percent, to close at 7,607.93, falling below its 10-day moving average. A total of 4.86 billion shares changed hands on market turnover of NT$139.04 billion. Foreign institutional investors were net sellers of NT$13.01 billion worth of shares.

Losers outnumbered gainers 2,141 to 591, with 126 stocks remaining unchanged.

The decline took place after the Dow Jones Industrial fell below 10,000 in overnight trading, after an analyst downgraded Wells Fargo & Co.

Wells Fargo, the largest U.S. home lender this year, slid 5.1 percent after the analyst, Dick Bove of Rochdale Securities, cut the shares to “sell” and said earnings were boosted by mortgage servicing fees rather than improving business trends.

The S&P 500 lost 9.66 points, while Nasdaq fell 12.74 and the Dow Jones Industrial Average 92.12. The Dow fell below 10,000 and closed at 9,949.36.

It was the TAIEX's third day of decline in a row. The index lost over 200 points over the past three days.

Analysts however advised investors not to worry.

“What happened over the past few days was just pressure to sell as a result of the TAIEX's recent bullishness, rather than the stocks' fundamentals turning weak,” said Yuanta Securities, yesterday.

Another analyst, Hsu Cheng-ta with KBC Concord, was even more upbeat.

“The TAIEX has risen some 3,000 points, and it's normal it takes a break,” Hsu said. “The 3,000 point rise is just the beginning phase of the current upward cycle. We're waiting for the main climb.”

In individual stocks, Leofoo Development Corp., Taiwan's largest theme-park operator, led the island's tourism stocks higher as the government expects the number of Chinese visitors to rise 11 percent next year.

Leofoo jumped 7 percent to NT$17.75, while Formosa International Hotels Corp. gained 2.23 percent to 412. The seven-member tourism index also surged.

“More Chinese investors coming to Taiwan is good news,” Sam Hsieh, a Taipei-based fund manager at Fuh Hwa Investment Trust Co., who helps oversee the equivalent of US$4.8 billion. “Investors generally see tourism shares as a long-term investment and such news boosted their confidence.”

Taiwan expects 900,000 visitors from China this year, up from an earlier estimate of 800,000, said Wayne Liu, director of international affairs division at the Taiwan tourism bureau. The island also forecasts 1 million visitors from China next year, Liu said in a telephone interview in Taipei yesterday.

Separately, Taiwan's labor insurance fund, which invests in local stocks, will in the future pick companies that have fulfilled their social responsibilities, said Chen Yi-min, president of the Labor Insurance Fund Co.

“We hope holdings in socially conscious businesses will increase to 50 percent,” he said.

Reactions to this plan were mixed. Opponents said it's hard to define whether companies have met their social obligations.

The fund made NT$35.39 billion in earnings from stocks in September, translating into an annualized yield of 20.72 percent, Chen said.

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