Tue, Dec 02, 2014 - Page 14 News List

Fubon sees TAIEX below 10,000

UNCERTAINTY:An impending capital gains tax, higher income tax rates and the Shanghai-Hong Kong exchange link are likely to weigh on the market, Fubon said

By Amy Su  /  Staff reporter

Trading on the TAIEX is likely to be capped below 10,000 points next year as growing competition from the newly launched Shanghai-Hong Kong exchange link adds pressure to an already-weak turnover, Fubon Securities Investment Services Co Ltd (富邦證券投資顧問) said yesterday.

The weighted index closed down 0.76 percent, or 69.44 points, at 9,117.71 yesterday after recovering some of the losses it had given up in early trade as investors fretted over the nation’s economy after the Chinese Nationalist Party’s (KMT) setback in the nine-in-one elections on Saturday.

Fubon Securities president Charles Hsiao (蕭乾祥) said the market’s performance was in line with expectations, as most analysts only expected a short-term impact from the elections.

However, the outlook for next year is uncertain, he said.

Various factors at home and abroad, such as the impending implementation of a capital gains tax on stocks, higher tax rates on consolidated income taxes for households with higher taxable incomes, and the Shanghai-Hong Kong exchange link, are expected to limit growth in market turnover and affect the TAEIX’s performance, Hsiao said.

The TAIEX is likely to peak at 9,500 to 9,800 points next year and pull back to a low of between 8,000 and 8,200 points, Hsiao said.

Given the uncertainty over economic policies and a likely slowdown in trade talks with China, Yuanta Securities Investment Consulting Co analysts (元大投顧) lowered their six to 12-month target for the TAIEX from 9,600 points to 9,500 points, the broker said in a report on Sunday.

In related news, Fubon Financial Holding Co (富邦金控), the parent firm of Fubon Securities, yesterday forecast that the nation’s GDP would grow between 3.4 percent and 4 percent next year.

The forecast is higher than the 3.5 percent economic growth projected by the Directorate-

General of Budget, Accounting and Statistics last month.

“Taiwan’s economic momentum next year will not be that weak, with mild economic expansion in the US and an improvement in China’s economy after the structural adjustments to be two major drivers,” Lo Wei (羅瑋), senior economist at Fubon Financial’s economic research center, told reporters at a forum held by the company.

Former Taiwan Stock Exchange chairman Schive Chi (薛琦), who was also at the forum, urged the government to ramp up talks with trade partners to sign more free-trade agreements (FTA).

Chi cited South Korea as an example, saying that growth in trading volume with partners with whom it has an FTA for four years or longer has expanded at a faster pace than its overall trading volume, which he added was an indication that FTAs benefit trade between the two sides.

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