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To: DJBEINO who wrote (9197)	2/26/2001 8:32:18 AM
From: DJBEINO	Respond to of 9582

DJ INTERVIEW: Schroders Looks To 2H For Taiwan Stk Mkt Rally By Dermot Doherty OF DOW JONES NEWSWIRES TAIPEI (Dow Jones)--An expected turnaround in the U.S. economy should trigger a rally in Taiwan's share prices during the second half of 2001, according to a foreign fund manager on the island. "Short term, it will probably still be quite volatile, but second half we're looking for the market to do reasonably well, the main reason being that (export-oriented) Taiwan always performs best when global growth is strong," Robert Horrocks, general manager of Schroder Investment Consulting Co. in Taiwan, told Dow Jones Newswires Monday. Horrocks said Schroders believes the current weakness in the U.S. economy is to a great extent due to inventory adjustment and that final demand, although slowing, will remain relatively strong. In addition, U.S. Federal Reserve Chairman Alan Greenspan's more active monetary policy should take effect quite quickly, helping the economy to grow by 1.5%-2% this year, he said. The Taipei-based fund manager said most foreign institutions are likely underweight to neutral on Taiwan stocks at present, but that overseas investors will likely build up their positions during the second and third quarters. Schroders is neutral with a slight bias to go overweight and has built its portfolio on long-term growth - rather than defensive - stocks, he said. Moreover, with the local bourse's price/earnings ratio trading near traditional lows of around 12, "prices have fallen to a level where the risks of investing now in Taiwan equities are not that large." Still, while the market's benchmark index, which ended Monday at 5716 points, should enjoy 10%-15% upside, it is unlikely to return to last year's year-high of around 10,202, he noted. Favors Semiconductor Stocks Horrocks said he favors chip stocks in the local equity market, particularly foundries and chip design houses, as well as fiber-optics and other component plays. "In terms of long-term growth, we still like semiconductor stocks," Horrocks said. "Previously, they've been driven just by the PC and telecommunications sectors, but more and more you're going to see them used in other products." The world's largest dedicated chip foundry, Taiwan Semiconductor Manufacturing Co. (TSM), and arch-rival United Microelectronics Corp. (Q.UME) are both listed on the Taiwan exchange. Meanwhile, politics, which badly dented local investor confidence during the fourth quarter, will likely take a back seat to the economy in 2001, Horrocks said. "As the economy turns around and the market picks up, a lot of these political problems will go away, (though they) could resurface at the end of the year when we have legislative elections," he said. A dispute between the government and opposition parties over the scrapping of a fourth nuclear plant combined with declines in the Nasdaq Composite Index dragged Taiwan's main stock market down 23% during the fourth quarter of 2000. On cross-strait issues, Horrocks remains upbeat, arguing that neither side will seek to raise tensions. "The fact that Chen Shui-bian has become president and relations with China have continued on a pretty good footing is an extremely strong positive," he said.