Am­ple liq­uid­ity could push Tai­wan shares up in April

The China Post - - LOCAL -

As the lo­cal mar­ket re­mains awash in liq­uid­ity, shares are ex­pected to ride the wave of an up­trend af­ter re­cent con­sol­i­da­tion, mar­ket an­a­lysts said Satur­day.

Wang Chung-liang, a manager of the Taishin Tai­wan Small & Medium Cap Fund, is one of the up­beat an­a­lysts.

Wang said that sev­eral ma­jor cen­tral banks around the world have kept in­ject­ing funds into the mar­ket and that the spillover ef­fects have been seen in the lo­cal mar­ket, lend­ing sup- port to lo­cal shares.

The Euro­pean Cen­tral Bank kicked off a U.S.-like quan­ti­ta­tive eas­ing pro­gram in early March to buy bonds worth 60 bil­lion eu­ros (US$64.8 bil­lion) per month from the mar­ket.

The Bank of Ja­pan, which has started pump­ing funds into the mar­ket, is ex­pected to an­nounce an ex­pan­sion of its stim­u­lus pro­gram later this month, while the cen­tral banks of China and South Korea have cut their key in­ter­est rates to keep liq­uid­ity high.

A worse-than-ex­pected March non-farm pay­roll re­port in Wash­ing­ton may slow down the pace of the U.S. Fed­eral Re­serve's launch of an in­ter­est rate hike cy­cle, which could fur­ther main­tain global liq­uid­ity lev­els.

On Thurs­day, the weighted in­dex on the Tai­wan Stock Ex­change closed up 0.97 per­cent at 9,600.32 points on a tech­ni­cal re­bound as for­eign in­sti­tu­tional in­vestors shifted to the buy side by buy­ing a net NT$5.27 bil­lion (US$168 mil­lion)-worth of lo­cal shares on the main board. The lo­cal eq­uity mar­ket was closed Fri­day for a public hol­i­day.

Although for­eign in­sti­tu­tional in­vestors reg­is­tered a net sell-off in re­cent ses­sions to lock in their ear­lier gains ahead of Thurs­day's buy­ing, they still kept mov­ing funds to Tai­wan from over­seas due to high liq­uid­ity lev­els in the global mar­ket, an­a­lysts said.

Wang said that in­vestors have been ad­vised to take ad­van­tage of the cur­rent am­ple liq­uid­ity by buy­ing into stocks in cer­tain sec­tors that have greater growth po­ten­tial. Among the sec­tors Wang fa­vors were In­ter­net- re­lated stocks, which could ben­e­fit from China's ef­forts in de­vel­op­ing the 4G LTE net­work na­tion­wide, while the an­a­lyst also rec­om­mended flat panel com­po­nent sup­pli­ers that are ex­pected to see ris­ing de­mand due to strong sales in ul­tra-high-def­i­ni­tion dis­plays.

Wang said that in­te­grated cir­cuit de­sign stocks could wit­ness de­mand grow­ing in the China mar­ket, and mem­ory chip mak­ers are ex­pected to see or­ders stream­ing in as their buy­ers rebuild in­ven­to­ries af­ter the Lu­nar New Year hol­i­day in Fe­bru­ary.

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