More than 90 percent of Taiwan-based firms at a two-day event were optimistic about the outlook for the local stock market this year, despite the possible impact of China’s efforts to pull back on easy credit, the Taiwan branch of Credit Suisse Securities said yesterday.
Randy Abrams, director and head of equity research in Taiwan for Credit Suisse, said at the Tuesday closing of a two-day forum in Taipei, that 27 of the 29 Taiwan-based enterprises taking part in the event expressed optimism over the local bourse’s performance for this year.
Citing the conclusion reached at the forum by representatives of the 27 Taiwanese businesses and more than 100 foreign institutional investors, Abrams said low inventory levels and strong demand would push the benchmark TAIEX to continue its rally in the first quarter of the year. This would include asset stocks that posted impressive jumps in value over the past year, he said.
Abrams forecast that the weighted index would surpass 9,000 points this year.
China’s obvious efforts to avoid inflation that could result from a loose monetary policy would only affect Taiwan’s stock market in the short term, fund managers said.
Economic fundamentals, rather than a higher reserve requirement ratio, are what would influence the long-term performance of the stock market, they said.
It is widely speculated that China’s central bank will raise the reserve requirement ratio by 0.5 percentage points every quarter until it reaches 17 percent.
Some local analysts said the move by the Chinese central bank is part of its initial efforts to stabilize the country’s economy and contain likely inflationary pressure brought about by soaring economic growth.
Taiwan’s share prices moved downward yesterday, with the weighted TAIEX dropping 112.81 points, or 1.35 percent, to close at 8,196.56.
The local bourse opened high at 8,229.25 and traded between 8,257.83 and 8,194.81 during the session.
A total of 4.93 billion shares changed hands on heavy market turnover of NT$141.01 billion (US$4.43 billion).
Losers outnumbered gainers 2,244 to 932, with 197 remaining unchanged. Foreign institutional investors were net sellers of NT$2.55 billion in shares.
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