The TAIEX is likely to rise further in the Year of the Snake, after picking up 9.3 percent in the Year of the Dragon, as the global economy recovers and jitters over the eurozone debt crisis and capital gains tax at home subside, Taiwan Stock Exchange Corp (台灣證交所) said on Wednesday.
The main index ended up 0.25 percent at 7906.65 on Feb. 6, the last trading day in the Year of the Dragon, with a turnover of NT$91.8 billion (US$3.09 billion), exchange data showed.
The local bourse is closed this week for a nine-day Lunar New Year holiday.
Investment institutions are generally upbeat about the local stock market, with targets for the TAIEX this year falling between 8,400 and 9,000, the exchange said, suggesting room for rallies after the bourse reopens on Monday.
The forecasts reflect a bullish mood after corporate profits showed significant improvement last quarter on the back of robust demand for electronics products, the exchange said.
Taiwan Semiconductor Manufacturing Co (台積電), the world’s top contract chipmaker, reported a 31.58 percent increase in net profit last quarter year-on-year, while the second largest, United Microelectronics Corp (聯電), posted 19.39 percent growth in net income year-on-year at NT$1.17 billion.
Improved profitability extended to domestic-driven sectors, including financial services providers, as evidenced by their strong earnings last month, the exchange said.
Trading volume has returned to healthy levels since November last year as unease over a capital gains tax gradually dispelled, the exchange added.
Europe’s debt problems played havoc on equities markets worldwide in 2011 and last year in similar manner to the global financial crisis of 2008 and 2009, the exchange said.
The TAIEX, which staged a 95.4 percent rebound in 2010, is set for another takeoff this year, the local bourse said, adding that economic research institutes at home and abroad have lent support to that forecast.
The IMF and the World Bank have annual GDP growth forecasts for Taiwan this year of 3.9 percent and 4 percent respectively, while the Directorate-General of Budget, Accounting and Statistics last month raised its forecast from 3.15 percent to 3.5 percent, the exchange said.
The government’s composite economic monitoring indicator in December last year flashed a “green” signal for the first time in 16 months, suggesting the nation’s economy is in steady growth, the exchange said.
Separately, the MSCI, a global investment index closely tracked by market analysts, yesterday left its weighting of Taiwanese shares unchanged in the wake of its quarterly review, though the market value of the local bourse edged up 0.12 percent, the bourse said in a separate statement.
The quarterly adjustments, if any, take effect at the end of this month.