Investor confidence in the stock market in the second quarter reached the highest it has been in two years after the TAIEX breached the 10,000-point mark, according to a survey released by JPMorgan Asset Management Co on Wednesday.
The survey’s equity investment index for the April-to-June period was 88.6, the highest since it posted 106.4 in the second quarter of 2015, JPMorgan said.
The second-quarter figure was also up from the first quarter’s 80.7.
The TAIEX closed above the 10,000-point level on May 11 for the first time in 17 years before retreating.
It surpassed the level again on May 23 and has stayed there since, reinforcing investors’ confidence in the market, the company said.
On Friday, the TAIEX closed at 10,156.73 as investors shrugged off concerns over high valuations of many large-cap high-tech stocks.
The benchmark index has gained 9.76 percent since the beginning of this year.
In the survey, the six factors that make up the index all trended higher in the second quarter as investor confidence was lifted by solid gains by local stocks.
The sub-index tracking the TAIEX’s movement rose from 77.5 in the first quarter to 91.9 in the second quarter, the sub-index for the economy grew from 68.4 to 80.5, and the sub-index for the political climate and cross-strait condition rose from 57.8 to 67.8, the survey showed.
The sub-index for the local investment environment rose from 73.1 to 82.2, the sub-index for the global economy edged up 0.5 points to 102.5, and the sub-index for possible gains in respondents’ stock holdings over the next six months climbed from 105.4 to 107.0, it showed.
A sub-index reading above 100 points indicates optimism.
Meanwhile, Capital Securities Corp (群益證券) said the TAIEX is expected to move between 10,300 points and 10,700 points in the second half of this year as the local and global economies continue to recover.
Taiwan’s GDP is expected to grow more than 2 percent this year and the US economy is forecast to grow about 2.2 percent, the brokerage said on Monday last week, adding that the eurozone is also improving.
Capital Securities said the local electronics sector plays an important role in the global supply chain and large-cap stocks, such as Taiwan Semiconductor Manufacturing Co (台積電), Hon Hai Precision Industry Co (鴻海) and Largan Precision Co (大立光), could continue to move higher in the second half of the year as long as foreign institutional buying continues.
Foreign institutional investors have bought a net NT$240 billion (US$7.9 billion) so far this year, the Taiwan Stock Exchange said.
However, since the US Federal Reserve is to downsize its balance sheet by cutting its holdings in bonds and assets later this year, the local equity market could face some turbulence in the fourth quarter, Capital Securities said.
Lin Shih-ping (林世彬), a fund manager at Uni-President Asset Management Corp (統一投信), said an uptrend of local equities is expected to continue as the profitability of listed companies has been improving.
Citing Taiwan Stock Exchange data, Lin said that the profits made by companies listed on the main board and the over-the-counter market in the first quarter rose more than 27 percent from a year earlier, and the growth this year could reach 10 percent.
Lin said that the high-tech sector will remain the main driver in the local equity market due to a promising outlook, adding that even if a correction occurs, the electronics sector is expected to lend support to the TAIEX.
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