Wed, May 25, 2005 - Page 11 News List

Market outlook good: Wu

LOOKING UP The vice premier said Morgan Stanley's increase of its Taiwan weighting and the London FTSE's upgrade for Taiwan should spell good times ahead

CNA , Taipei

Plans by Morgan Stanley Capital International Inc (MSCI) to raise its weighting of Taiwan stocks to 100 percent and the London-based FTSE to list Taiwan among developed markets are expected to lend momentum to the local bourse in the second half of this year, Vice Premier Wu Rong-i (吳榮義) said yesterday.

Wu made the remarks while giving a speech on the status and outlook of the economy at a meeting of the Republic of China-USA Business Council.

Wu pointed out that the daily turnover of Taiwan stocks was NT$50 billion (US$1.59 billion) to NT$60 billion in the first quarter of this year, compared with NT$100 billion registered during the same period last year.

The lackluster performance of the stock market has dampened private consumption and economic growth, Wu said.

However, foreign investors' interest in local shares remains strong, with turnover by foreign investors in the stock market increasing to 24 percent of the total this year from 18 percent last year, Wu pointed out.

He predicted that foreign investors' involvement in Taiwan stocks is expected to increase further following the hike in the weighting of Taiwan stocks by the MSCI later this month and the nation's upgrade to developed market status by the FTSE.

On the local bourse, the benchmark TAIEX rose 23.65 points to close at 5,909.10, on turnover of NT$48.93 billion. Foreign investors bought a net NT$4.77 billion worth of Taiwan stocks yesterday, after they sold a net NT$314 million of shares on Monday, according to Taiwan Stock Exchange statistics.

During his speech, Wu also updated the nation's economic forecast. He said inflationary pressure is low with the consumer price index projected to rise 1.7 percent this year. April's unemployment rate of 4.04 percent means the government is close to achieving its target of lowering the jobless rate to under 4 percent, he said.

Uncertainties that are likely to influence the economy this year include soaring international oil prices, interest rate hikes in the US, China's measures to cool its overheating economy and the possible rise of the Chinese currency if Beijing decides to relax its peg to the US dollar, Wu added.

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