Despite a regional market slump triggered by Thailand's capital controls and a technical correction at home, Taiwan's stock market recorded only a slight drop yesterday, with a foreign equity research house predicting that the index could rally to 10,000 points next year.
Macquarie Securities, which upgraded its rating on the local bourse to "overweight" earlier this month, said in a report released yesterday that it expected the benchmark index to reach 10,000 points by the end of next year, making it one of the most bullish among recent forecasts made for the market.
The TAIEX yesterday stopped a three-day rally and slid by 25.74 points, or 0.34 percent, to 7,598.88 on turnover of NT$114.86 billion (US$3.5 billion).
Technology shares led the decline, with Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world's largest made-to-order chipmaker, dropping 2.3 percent to NT$65.20. TSMC's Fab 12 in the Hsinchu Science Park (新竹科學園區) experienced a temporary power outage on Monday afternoon, but the company yesterday said that operations were back to normal.
Foreign investors sold a net of NT$323.27 million of domestic stocks yesterday. Year to date, foreign investors have bought a net of NT$534.43 billion, according to Taiwan Stock Exchange's data.
Macquarie's forecast is the most upbeat among the projections made by local and foreign securities houses in recent weeks. These include Goldman Sachs' index target of 9,400 points, Citigroup Global Markets' 8,450 and Mega Securities Co's (
In the report, Chris Hunt, head of equity research at Macquarie's Taiwan branch, cited 10 factors as the basis of his optimistic view of the local stock market.
Topping the list is regional liquidity, which is expected to flow back to Taiwan as portfolio investors change their position from being underweight on Taiwan during the last two years to overweight, Hunt said.
The effect might be enhanced if the local currency appreciated significantly along with the Chinese yuan and the Japanese yen as the greenback weakens in line with an expected US economic slowdown next year, Hunt wrote.
Taiwanese high-tech companies' earnings had bottomed out in the third quarter of this year and began to move up in current quarter, Hunt wrote, adding that strong growth in the semiconductor subsector would likely kick in after the second quarter of next year.
Other factors such as capital inflow from private equity fund players on the lookout for "big" deals, a forecast rebound in domestic consumption confidence and retail investor sentiment, and attractive stock valuations could all drive up the market next year, Hunt said.
In May, Jesse Wang (
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