The US Federal Reserve’s third round of quantitative easing (QE3) will affect Taiwan’s stock market for one to two months, UBS Securities Taiwan said on Saturday.
The quantitative easing policy will likely benefit the stocks of companies in the construction sector and those with high tangible assets more than any others, said William Dong (董成康), head of research at UBS Securities Taiwan.
The Fed announced on Thursday it would be spending US$40 billion to buy mortgage-backed securities every month for however long it deems necessary, a move Dong said would promote the flow of capital in the short term, which will indeed help Taiwanese stocks.
However, in the middle and long term the impact of QE3 will be decided by the strength of economic recovery, said Dong, who did not anticipate big changes in Taiwan’s economy over the next six months.
The TAIEX closed up 2.1 percent at 7,738.05 on Friday last week, its highest close since April. The index is expected to challenge the 8,000-point mark in the near term, but other academics and economists were cautious about the impact of QE3 on Taiwan.
Polaris Research Institute (寶華綜合經濟研究院) president Liang Kuo-yuan (梁國源) said he worried capital would flow to high-risk assets, including crude oil and commodities, while Liu Meng-chun (劉孟俊), director of the center for economic forecasting at the Chung-Hua Institution for Economic Research (中華經濟研究院), warned that Taiwan could soon face imported inflation.
Dong said he expected QE3 would lead to the appreciation of the New Taiwan dollar, but by a lesser degree than during the previous two rounds of quantitative easing.
From November 2008 to March 2010, the NT dollar gained 4.8 percent during QE1 and about 6 percent during QE2 from November 2010 to June last year. The NT dollar rose NT$0.23 to close at NT$29.469 against the US dollar on Friday, its highest level since May 11.
Taiwan’s foreign exchange reserves fell below the US$600 billion mark at the end of last month, with the central bank reporting a total of US$596.89 billion — a decline of US$8.6 billion from February — ending a three-month streak of increases. The central bank attributed the drop to a combination of factors such as outflows by foreign institutional investors, currency fluctuations and its own market interventions. “The large-scale outflows disrupted the balance of supply and demand in the foreign exchange market, prompting the central bank to intervene repeatedly by selling US dollars to stabilize the local currency,” Department of Foreign
Intel Corp is joining Elon Musk’s long-shot effort to develop semiconductors for Tesla Inc, Space Exploration Technologies Corp and xAI, marking a surprising twist in the chipmaker’s comeback bid. Intel would help the Terafab project “refactor” the technology in a chip factory, the company said on Tuesday in a post on X, Musk’s social media platform. That is a stage in the development process that typically helps make chips more powerful or reliable. The chipmaker’s shares jumped 4.2 percent to US$52.91 in New York trading on Tuesday. The Terafab project is a grand plan by Musk to eventually manufacture his own chips for
Taiwan Power Co (Taipower, 台電) yesterday said it plans to resume operations at two coal-fired power generators for three months to boost security of electricity supply as liquefied natural gas (LNG) supply risks are running high due to the Middle East conflict. The two coal-fired power generators are at Mailiao Power Plant in Yunlin County’s Mailiao Township (麥寮). The plant, operated by Formosa Plastics Group (台塑集團), supplied electricity to Taipower’s power grid until the end of last year. Taipower’s decision came about one month after Minister of Economic Affairs Kung Ming-hsin (龔明鑫) on March 10 said that the nation had no imminent
Some robotaxi passengers were left stranded in the middle of fast-moving traffic in a major Chinese city after their driverless vehicles stopped running, according to police and media reports on Wednesday. A preliminary investigation indicates more than 100 robotaxis came to a halt because of a “system malfunction,” police in the city of Wuhan said in a statement, without elaborating. No injuries were reported. One passenger told Chinese media that their robotaxi stopped after turning a corner. An instruction on a screen read: “Driving system malfunction. Staff are expected to arrive in 5 minutes.” After no one showed up, the passenger pushed
RSS