The TAIEX is likely to climb higher next year after ending up 8.87 percent this year at 7,699.5 points yesterday, as jitters over Europe’s debt problems subside while an improved global economy and liquidity excess spur risk appetite, stock analysts said yesterday.
The main index is forecast to peak at 9,063 points in the fourth quarter of next year and advance to 8,300 in the coming three months, after being impacted for most of the year by concern over the economic slowdown and unfavorable government policies, notably the capital gains tax on stock investments, analysts said.
“The local bourse may stage a solid comeback next year, as the US and China accelerate their economic recoveries, thus benefiting the nation’s exports and shoring up investor sentiment,” Taishin Securities Investment chairman Andy Wu (吳火生) said.
The TAIEX may move above the “psychological barrier” of 8,500 points — at which individual investors are subject to capital gains tax — to 9,063 points in the fourth quarter, Wu said.
Funds that are currently taking shelter in government and corporate bonds may flow into equities again in search of better profits as risks of systematic failure ease significantly, he said.
The US may soon resolve its “fiscal cliff” crisis lending support to global GDP growth of 3.6 percent next year from 3.3 percent this year, Wu said, citing IMF figures.
Meanwhile, central banks across emerging economies could maintain low interest rates to boost economic growth, a move that will help drive funds to risky assets, he said.
Expectations of a rally on the index led institutional investors to build positions ahead of the New Year holiday, lifting the TAIEX by 0.67 percent yesterday on turnover of NT$70.1 billion (US$2.41 billion), Doris Lee (李穗佳), a fund manager at Taishin Securities Investment Trust Co (台新投信) said.
Foreign investors bought a net of NT$4.14 billion in local shares, and mutual funds increased their holdings by a net of NT$124 million, while proprietary traders trimmed a net of NT$240.48 million, Taiwan Stock Exchange data showed.
The local bourse will be closed until Wednesday for New Year.
The index’s rebound may continue after the holiday in the absence of major bad news from abroad, Lee said, adding that light trading may keep the TAIEX between 7,500 points and 7,800 points next week.
“The main index may challenge 7,800 points if turnover increases to NT$100 billion,” she said.
Cathay Securities Co (國泰證券), the brokerage arm of Cathay Financial Holding Co (國泰金控), echoed the positive view, saying that the TAIEX may approach 8,300 points in the first quarter of next year on the back of traditional “red envelope” rallies.
Taiwanese employees usually collect year-end bonuses ahead of the Lunar New Year with some expected to channel some of the money into equities, analysts said.