Taiwanese shares may rise as much as 15 percent by the end of this year as the country pursues trade and investment agreements with China, the nation’s second-best-performing fund said.
The TAIEX may advance to 8,500 this year, Alan Ho (何燿廷), manager of the Union China Fund at Union Securities Investment Trust Co (聯邦投信), said in a telephone interview on Tuesday.
The TAIEX gained 0.9 percent at the close on Tuesday after climbing 1.2 percent on Monday after Taiwan and China reached an initial accord to boost trade worth about US$110 billion a year.
The stock market was closed yesterday for a public holiday.
“The government may introduce more policies related to cooperation with China to help lift the stock market,” said Ho, whose 40.5 percent return in the past 12 months was the second best among 384 funds active in Taiwan. “Lower tariffs will mean Taiwan exporters have an easier time entering China’s market.”
The TAIEX has fallen 9.78 percent this year amid concern Europe’s sovereign debt crisis will reduce the demand for technology exports from Asia.
UBS AG, Switzerland’s biggest bank, last month cut its target for the index this year to 7,600, the second reduction in three months. HSBC Holdings Plc this month lowered its forecast by 20 percent to 8,000.
The TAIEX jumped 78.34 percent last year as President Ma Ying-jeou (馬英九) moved toward closer ties with China.
Ma has been pushing for an economic cooperation framework agreement with China to bolster export-dependent Taiwan’s economy after a Chinese trade agreement with ASEAN began this year.
The Chinese Nationalist Party (KMT) lost seats to the Democratic Progressive Party in by-elections earlier this year, giving the opposition party more than a quarter of the 113-seat parliament.
Voters will get a further chance to show whether they support the KMT’s cross-strait policies in special municipality elections scheduled for Nov. 27.
The KMT “is incentivized to provide some positive stimulus to the market,” Peter Kurz, whose team was ranked first for Taiwan research by Institutional Investor for the past three years, said in an interview on May 25.
Ho said he’s buying shares of companies with businesses in China.
His selections include Clevo Co (藍天電腦), the owner of Chinese electronics chain store BuyNow (百腦匯), and Ruentex Industries Ltd (潤泰), a Taiwanese company that owns a stake in RT-Mart China (中國大潤發), the country’s largest hypermarket chain by retail sales.
“China may revalue the yuan this year, so they will boost domestic consumption to help the economy,” Ho said.
“Those companies that can profit from the local market in China will benefit,” he said.
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