The historic meeting on Saturday between President Ma Ying-jeou (馬英九) and Chinese President Xi Jinping (習近平) in Singapore is expected to have a limited impact on the TAIEX this week due to a lack of economic and trade accomplishments, analysts said.
After seeing signs of a sell-off in local shares late last week, the market is expected to focus on economic news and the outlook for the technology sector in the run-up to the year-end holiday season, they said.
“The Ma-Xi meeting is more symbolic than substantial,” said Roy Chun Lee (李淳), deputy director of the Chung Hua Institution for Economic Research’s (CIER, 中華經濟研究院) Taiwan WTO Center.
Photo: AP
Lee said the leaders’ meeting did not create any “exciting topics” for the market.
“Even if investors greeted the meeting with a positive attitude, the impact on the market would be short-lived... Investors this week are expected to refocus on the nation’s economic fundamentals, such as corporate earnings and industry outlook,” he said.
Masterlink Securities Investment Advisory Corp (元富投顧) president Liu Kun-hsi (劉坤錫) said he was positive about the latest reconciliation across the Taiwan Strait, but lamented the lack of any solid progress on trade and economic issues from the meeting.
“Ma and Xi might have paved a way for future presidents of Taiwan and China to hold meetings on a regular basis, but the meeting this time has no economic breakthroughs,” Liu said by telephone.
“Investors are likely to focus more on the fundamental issues than the meeting itself,” he said.
In addition to monitoring the releases of earnings results from listed companies, investors this week are also expected to have their eyes set on how lawmakers deliberate on a draft bill of a capital gains tax on securities investments and if the nation’s exports remain in a slump in the final quarter of the year.
Taiwan’s exports shrank by double-digit percentage points for the fourth consecutive month in September, with accumulated exports dropping 9.4 percent year-on-year in the first nine months of the year amid lingering weak global demand, according to government statistics.
The Ministry of Finance is scheduled to release the results of last month’s foreign trade data today, which might show another double-digit fall in exports, local media reported yesterday, citing Minister of Finance Chang Sheng-ford (張盛和).
Chang on Saturday said that amid a sluggish global economy, the typical peak season effects of the fourth quarter have yet to appear and Taiwan’s exports last month would likely fall again.
However, the fall is expected to be lower than September’s 14.6 percent dip, media reports said.
Chang expects exports to improve from next month when buyers in the US and Europe stock up on goods ahead of Christmas.
Financial Supervisory Committee Chairman William Tseng (曾銘宗) on Saturday said the Ma-Xi meeting was an important milestone for the development of the cross-strait relationship, and it would benefit financial and economic interactions between the two sides.
“The stock market would see a premium on peace across the Taiwan Strait in the mid and long-term following the meeting,” Tseng was quoted as saying by the Chinese-language Apple Daily.
However, the market might have already priced in the meeting on Wednesday, when the TAIEX gained 1.65 percent on the back of a net purchase of NT$21.73 billion (US$663.92 million) in Taiwanese shares by foreign institutional investors, Hua Nan Securities Management Investment Co (華南投顧) chairman David Chu (儲祥生) said.
“I do not think the Ma-Xi meeting will be a catalyst for local bourse this week,” Chu said by telephone.
Rather, it is worth noting that the selling pressure — which emerged on Friday — might continue today given that there is no exciting catalyst in sight, Chu said.
Institutional investors sold a net NT$17.12 billion of Taiwanese shares on Friday, including a net sale of NT$14.66 billion by foreign institutional investors, Taiwan Stock Exchange data showed.
The TAIEX fell 1.77 percent on Friday, but rose 1.63 percent last week from the previous week.
Additional reporting by CNA
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