TAIEX above 10,000 on trade ceasefire

‘EASED WORRIES’::The agreement gave investors some room to breathe, but that does not mean that the trade spat will be resolved, Fubon Securities’ Michael Kuo said

By Kao Shih-ching  /  Staff reporter

Tue, Dec 04, 2018 - Page 12

The TAIEX yesterday jumped 2.53 percent to close at 10,137.87 points, breaching 10,000 points for the first time since Oct. 12, after US President Donald Trump and Chinese President Xi Jinping (習近平) on Saturday agreed to suspend new tariffs at the G20 meeting in Argentina.

The weighted index opened higher and rose to 10,055.41 points after two minutes of trading. It continued to climb throughout the session. It ended 249.84 points higher at 10,137.87, from its close of 9,888.03 on Friday.

Turnover was NT$166.84 billion (US$5.43 billion), with foreign institutional investors buying a net NT$5.69 billion of local shares, Taiwan Stock Exchange data showed.

With all sub-indices advancing, the rally was led by Taiwan Semiconductor Manufacturing Co (台積電), the most heavily weighted stock on the local market, which closed up 4.21 percent at NT$235.

Trump and Xi agreed to suspend any new tariffs for 90 days, providing room for negotiations, but the White House said that the 10 percent tariff on Chinese goods would leap to 25 percent if Beijing does not meet Washington’s demands in that time frame.

News of the ceasefire between the world’s two largest economies also boosted other Asian equity markets.

South Korea’s KOSPI rose 1.67 percent, Japan’s Nikkei 225 increased 1 percent, Hong Kong’s Hang Seng Index added 2.55 percent and the Shanghai Composite Index jumped 2.57 percent.

“Many firms and investors were concerned about the 25 percent tariffs targeting US$200 billion of Chinese goods that were to kick in on Jan. 1. They are shelving orders and production plans, but the truce between the US and China eased their worries,” Xincheng International Investment Consultant (信誠環球投顧) analyst Chang Chih-cheng (張志誠) said.

Local equities are likely to continue rising until the Lunar New Year, but it would be difficult for the TAIEX to breach 11,000 points unless the US and China reach a final agreement, Chang said.

“The ceasefire agreement gave investors an opportunity to take a break, but we cannot rely on it, as the trade disputes will not be eased in the short term,” Fubon Securities Co (富邦證券) executive vice president Michael Kuo (郭永宜) told the Taipei Times on the sidelines of an investment conference in Taipei.

“The trade dispute is like a cancer, which we do not know the biopsy result, if it is benign or malignant, but we can only learn how to deal with it,” Kuo said.

Fubon Securities Investment Services Co (富邦投顧) chairman Charles Hsiao (蕭乾祥) said that it is difficult for China to meet the US’ demands, as it is in conflict with China’s “Made in China 2025” policy, so investors still need to prepare for the worst, he added.