Morgan Stanley won't downgrade Taiwan stocks
Taipei, Aug. 1, 2000 (CENS)--Morgan Stanley Dean Witter will not consider lowering its ratings of Taiwan's stocks, despite the recent weakness of the local bourse, an analyst of the Taipei branch of the U.S. investment bank said Tuesday.
Based on expectation of the profitability for the coming year, the current price/ earning (P/E) ratio of the local stock market has reached the lowest level in 12 years, with the main index hovering between 7500 and 7600 points, said Ho Tsu-wen, chief analyst of MSDW Taipei.
The main index of the Taiwan Stock Exchange, or Taiex, dropped to an intraday low of 7723 late last week which was very close to MSDW's prediction of the 12-year low, Ho said.
In recent years, such low levels have only occurred once during the missile crisis in 1996 and another in late 1998 at the end of the regional financial crisis, Ho noted.
The Taiex benchmark price index fell 130.27 points, or 1.6%, to 7994.65 Tuesday.
The risks for buying stocks at such level are rather limited, Ho said, adding that he expected local share prices will rebound shortly following the recent support-buying by the government funds and coordinated efforts by related government agencies.
The recent falls of the local stocks were due to a lack of confidence, worries over cross-strait relations and discords over financial polices among related government agencies, though Taiwan's exports and industrial production remain robust, Ho said. |
