The stock market yesterday ended higher after the inauguration day of President Tsai Ing-wen (蔡英文), although market turnover declined to the lowest level in about one month.
Analysts said the market moved higher in line with increases in regional markets, attributing the outcome to a swath of positive factors, such as Tsai’s neutral stance on Taiwan-China ties in her inauguration speech and technical rebounds of some heavyweight stocks.
“Tsai’s remarks about Taiwan’s relationship with China is a serious concern for investors,” Mega International Investment Services Corp (兆豐國際投顧) analyst Alex Huang (黃國偉) said by telephone.
Tsai said she respects the “historical fact” of the meeting between two sides in 1992, but she did not echo the so-called “1992 consensus,” which has “one China” connotations.
“Tsai showed certain compromises during her inauguration speech, a better result than most investors anticipated,” Huang said. “At least she did not say anything provocative to China.”
The TAIEX briefly reached a high of a 0.83 percent increase in the middle of the session following Tsai’s speech, before paring gains to close 0.44 percent higher at 8,131.26.
It was the first time the TAIEX ended higher on the day of a presidential inauguration: The TAIEX fell 4.1 percent on May 20, 1996, 3.28 percent in 2000, 0.77 percent in 2004, 2.79 percent in 2008 and 2.43 percent in 2012, according to statistics compiled by the Taiwan Stock Exchange.
Turnover was NT$57.541 billion (US$1.76 billion), the lowest since April 25.
“Investors are taking a wait-and-see attitude now, as reflected in the thin turnover,” Huang said.
In addition, concerns over potential monetary policy adjustments by the US Federal Reserve next month and the fundamentals of listed companies are also major drags, Huang said.
Moody’s senior vice president Marie Diron said the “inauguration speech’s call for peaceful cross-strait relations points to some stability in the immediate future.”
“However, Taiwan will remain vulnerable to negative shocks to confidence related to changes, perceived or real, to Taiwan’s relationships with China. Such confidence shocks from periodic increases in tensions could hamper foreign direct investment,” Diron said in a statement.
Moody’s said the new administration takes office amid a weak growth environment and forecast that GDP would grow only slightly more than 1 percent this year and remain less than 2 percent next year.
Meanwhile, leaders from local industrial groups yesterday expressed neutral views over Tsai’s comments regarding relations with China and the president’s economic reforms.
Chinese National Association of Industry and Commerce chairman Lin Por-fong (林伯豐) said that Tsai’s ideas were not new.
“Tsai is trying to play it safe,” Lin said. “On certain key issues about Taiwan-China ties and economic reform, she did not say anything different from what we expected.”
General Chamber of Commerce chairman Lai Cheng-i (賴正鎰) said he worried that Tsai’s vague stance regarding the “1992 consensus” could make China jittery and hinder close cross-strait trade ties and the nation’s entrance into a regional economic block, including the Trans-Pacific Partnership and the Regional Comprehensive Economic Partnership.
Without China’s support, the progress of the trade pact and service trade pacts with Beijing could be put off as well, Lai added.
Moody’s said the new administration’s objective to foster trade relationships with other economies in Asia would be difficult to meet amid a sluggish global trade environment.
The “1992 consensus,” a term former Mainland Affairs Council chairman Su Chi (蘇起) admitted making up in 2000, refers to a tacit understanding between the Chinese Nationalist Party (KMT) and the Chinese government that both sides of the Strait acknowledge there is “one China,” with each side having its own interpretation of what “China” means.
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