Despite worsening economic fundamentals, the recent boom in the local stock market was a result of investor expectations on improving cross-strait trade relations, Daiwa Institute of Research chief economic adviser Christine Liu (劉憶如) said yesterday.
“Money has talked … despite some foreign economists expressing pessimistic views about the local economy,” Liu told a business summit that was co-organized by the European Chamber of Commerce Taipei (ECCT) and the Chinese International Economic Cooperation Association.
She said she expected the local economy to rebound by year’s end. The TAIEX has climbed 15 percent since early this year, outperforming all Asian markets but China, which saw a 22 percent jump, she said.
In Taipei trading yesterday, the benchmark TAIEX closed up another 0.08 percent to 5,390.7 points on turnover of NT$142.575 billion (US$4.22 billion). The index has risen 8.65 percent this week.
The nation’s economy is sure to contract this year, but won’t be the worst among its Asian counterparts, Liu said.
With expectations of a boost from enhanced economic relations with China and relaxed regulations on China-based businessmen, the government’s recent cut in the gift and inheritance tax from a 50 percent to a 10 percent rate has helped attract capital inflows, all of which Liu said would contribute to economic recovery.
The ECCT also threw its support behind the government’s planned economic cooperation framework agreement (ECFA) with China and efforts in simplifying application procedures for Chinese businessmen to enter Taiwan.
“Resolving this long-standing issue will be a strong incentive for foreign companies to hold regional meetings in Taiwan, which in turn would boost the country’s business environment,” the ECCT said in a statement.
ECCT chairman Philippe Pellegrin urged Taiwan to accelerate its push for a trade enhancement agreement with the EU, without which, Taiwan would be put at a significant disadvantage to South Korea, which is close to implementing a free trade agreement with the EU, he said.
Meanwhile, Taiwan Semiconductor Manufacturing Co (台積電) founder Morris Chang (張忠謀) gave a vote of no confidence to government rescue plans around the world, including Taiwan.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
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