TAIEX rises on trade hopes
Share prices closed 1.86 percent higher yesterday in a broad rally driven by continuing hopes for improved trade ties with China, dealers said.
Those hopes, boosted by an upcoming trip to China by vice president-elect Vincent Siew (蕭萬長), helped investors put aside worries over the US economy and record oil prices, they said.
Siew will fly to China today for the Baoa forum, where he is expected to meet with top Chinese officials.
The TAIEX closed up 161.47 points at the day’s high of 8,829.40, after hitting a low of 8,681.89. Turnover was NT$130.94 billion (US$4.32 billion).
Alex Huang (黃國偉), an assistant vice president at Mega Securities Corp (兆豐證券), said the market was boosted by fresh optimism over cross-strait relations.
“The prospect of improved ties convinced investors to boost expected beneficiaries of possible policy deregulation,” Huang said.
“While there were concerns about technology firms’ earnings results for the first quarter and the second-quarter outlook, some investors are raising exposure on hopes of a peak season in the third quarter,” he said.
Air China plans Taiwan flights
Air China Ltd (國航), China’s largest international carrier, plans to start scheduled flights to Taiwan as soon as the services are allowed.
“We are fully prepared to operate regular direct flights,” Air China board secretary Huang Bin (黃斌) said by telephone yesterday.
He declined to confirm or deny a Chinese-language Commercial Times report that the Beijing-based carrier plans to apply to open an office in Taiwan after the new government is installed in Taipei on May 20.
President-Elect Ma Ying-jeou (馬英九) has pledged to end the ban on regular direct cross-strait flights as soon as he takes office on May 20.
NT dollar expected to soar
The New Taiwan dollar may rise against the US greenback to the highest level in more than a decade as the central bank will allow the currency to appreciate to curtail inflation, Goldman Sachs Group Inc said.
Goldman today recommended that its clients buy the NT dollar against an equally weighted basket consisting of the euro and US dollar, Jens Nordvig, a New York-based currency strategist, and his colleagues wrote in a research note.
The currency, which is “undervalued” by 16 percent, will rise to NT$29 in the “next few months,” Nordvig said.
“Inflation is at the high end of the level the central bank is comfortable with,” Nordvig said in an interview with Bloomberg yesterday.
“The central bank will adopt a more flexible approach to allow the currency to appreciate further,” he said.
The NT dollar gained 6.58 percent to close at NT$30.308 against the greenback, which was the best performer among the 10 most-traded currencies in Asia outside of Japan, on turnover of US$1.235 billion yesterday.
Consumer prices climbed last month, rising 3.96 percent from a year earlier, the Directorate General of Budget, Accounting and Statistics said on Monday.
A faster appreciation of the Chinese yuan will convince Taiwan that the strengthening of the local currency won’t hurt its exporters’ competitiveness, Nordvig’s research note said.
China’s yuan gained 4.2 percent so far this year versus the US dollar.
Goldman, the world’s largest securities firm, suggests investors buy the NT dollar through one-year non-deliverable forward contracts. It is one of the top trades Goldman recommends for this year.
Taiwanese suppliers to Taiwan Semiconductor Manufacturing Co. (TSMC, 台積電) are expected to follow the contract chipmaker’s step to invest in the US, but their relocation may be seven to eight years away, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. When asked by opposition Chinese Nationalist Party (KMT) Legislator Niu Hsu-ting (牛煦庭) in the legislature about growing concerns that TSMC’s huge investments in the US will prompt its suppliers to follow suit, Kuo said based on the chipmaker’s current limited production volume, it is unlikely to lead its supply chain to go there for now. “Unless TSMC completes its planned six
Power supply and electronic components maker Delta Electronics Inc (台達電) yesterday said second-quarter revenue is expected to surpass the first quarter, which rose 30 percent year-on-year to NT$118.92 billion (US$3.71 billion). Revenue this quarter is likely to grow, as US clients have front-loaded orders ahead of US President Donald Trump’s planned tariffs on Taiwanese goods, Delta chairman Ping Cheng (鄭平) said at an earnings conference in Taipei, referring to the 90-day pause in tariff implementation Trump announced on April 9. While situations in the third and fourth quarters remain unclear, “We will not halt our long-term deployments and do not plan to
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
The New Taiwan dollar and Taiwanese stocks surged on signs that trade tensions between the world’s top two economies might start easing and as US tech earnings boosted the outlook of the nation’s semiconductor exports. The NT dollar strengthened as much as 3.8 percent versus the US dollar to 30.815, the biggest intraday gain since January 2011, closing at NT$31.064. The benchmark TAIEX jumped 2.73 percent to outperform the region’s equity gauges. Outlook for global trade improved after China said it is assessing possible trade talks with the US, providing a boost for the nation’s currency and shares. As the NT dollar
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