June 29 (Bloomberg) -- Taiwan’s stock market “correction” may have come to an end after the benchmark Taiex index fell as much as 12 percent from this year’s high, according to Elliott Wave International Inc.

The Taiex declined to near “the range of a prior fourth wave of one smaller degree,” a common indication that declines may have ended, Elliott Wave International said in its Asian- Pacific Financial Forecast report. The gauge also rebounded since falling to near the lower trend line that has marked its gains from the 2008 low, the research company said.

The stock index has rallied as much as 51 percent this year before peaking on June 1 on speculation that easing ties between the island and China will bolster trade and boost investment. The measure subsequently declined 13 percent before rebounding.

“If our long-term wave count is correct, Taiwan’s economic worst should soon be over, if it is not already,” Eliott Wave International said in a June 26 report.

Gains this year have helped the Taiex to the 10th-best performance among the 90 indexes tracked by Bloomberg globally. Elliott Wave are “long-term bulls” on Taiwan, along with India and Korea, among the eight markets it covers in Asia, the research company said in a report.

A decline in volume and momentum during the benchmark index’s recent retreat also indicated the low point in Taiwan’s longer-term rally, Gainesville, Georgia-based Elliott Wave International said.

The research firm reiterated an earlier call that Asian stocks may climb further, with the MSCI Asia-Pacific Index rising to 110, before posting a decline, it said.

To contact the reporter on this story: Chen Shiyin in Singapore at schen37@bloomberg.net

Last Updated: June 29, 2009 01:36 EDT