Shares on the TAIEX are expected to lead the local stock market lower today, following accusations of fraud against Goldman Sachs by the US Securities and Exchange Commission (SEC), which sent global stock markets plunging on Friday, analysts said yesterday.
The market is expected to experience further corrections during the first two days of trading as foreign investors began selling on Friday, they said.
The TAIEX reached a new high last week.
However, a rebound remains possible in the next few days, as the case could be an isolated incident, in which case it would have a limited impact on the TAIEX, the analysts said.
The market could be boosted in the last few days of trading amid bargain-buying or as a result of tomorrow’s legislative vote on an amendment to the Income Tax Act (所得稅法), which proposes lowering the corporate income tax rate to 17 percent from 20 percent, they said.
A Chinese-language United Daily News report said that if the fraud suit prompted selling, particularly among foreign institutional investors, it could make it difficult for the TAIEX to remain above the 8,000-point mark.
However, the report also cited Chen Kuan-rong (陳冠融), chief of an asset management company, as saying that if the Goldman Sachs fraud case is an isolated incident, there would be no long-term impact on the fundamentals of the TAIEX.
Chen said that with the TAIEX having reached a high for this year of about 8,100 points, if no new strength is injected into the market, the benchmark index could pull back to between 7,600 and 7,800 points.
Another Chinese-language publication, the Economic Daily News, quoted Wu Zu-wang (吳祖望), a fund manager at Shin Kong Investment Trust Co (新光投信), as saying that while he does not expect the fraud case to have a serious impact on the TAIEX, he believed the effetcs from the recent volcanic eruption in Iceland could spread.
The eruption has disrupted flights throughout Europe and sent shares of China Airlines (華航) and EVA Air (長榮) plummeting on Friday, Wu said.
On the other hand, Wu said, China’s bright economic outlook for the year could give a boost to the local bourse.
World Expo 2010 Shanghai next month, the three-day Labor Day holiday and an appreciation of the yuan are factors that could boost the local market, Wu said.
Liu Kun-hsi (劉坤錫), president at Masterlink Securities Investment Advisory Corp (元富投顧), said that if the TAIEX failed to remain above its monthly moving average of 7,992 points, selling pressure could increase.
Since the volcano eruption and resulting ash cloud is triggering uncertainty, it will be difficult to estimate its effects, which will cast a shadow on stock markets around the world, he said.
RECORD BUDGET: TSMC does plan to raise its proposed capital expenditure a lot, and could benefit if Intel outsources more of its production to foundries, analysts said Intel Corp’s earnings conference call on Thursday is expected to clarify the US semiconductor giant’s outsourcing production plans, which would be crucial regarding Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) performance, analysts said. “TSMC stands to benefit if Intel outsources more of its fabrication to foundries,” SinoPac Securities Investment Service Corp (永豐投顧) analysts said in a note on Friday. Yuanta Securities Investment Consulting Co (元大投顧) was more cautious, saying that Intel’s contribution initially would be limited, but its outsourcing plans would still highlight TSMC’s leadership in technology, it added. “Intel will continue to manufacture server or high-end central processing units [CPUs], which have higher
MediaTek Inc (聯發科) yesterday announced it would give incentive bonuses totaling NT$1.7 billion (US$59.7 million) to its employees and those at the firm’s major subsidiaries, after the smartphone chip supplier’s revenue hit US$10 billion last year. This is the biggest incentive bonus the Hsinchu-based handset chip designer has ever distributed in its 23-year history. About 17,000 full-time employees of MediaTek and five of its subsidiaries, including Richtek Technology Corp (立錡科技) and Airoha Technology Corp (絡達科技), would receive a “red envelope” of NT$100,000 each, the company said. “Surpassing US$10 billion is just the beginning. We will continue to [grow] on this basis,” MediaTek
TO SPUR REVENUE: The contract chipmaker expects its profit to grow 15 percent this year, outpacing the foundry industry’s projected advance of about 10 percent Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday raised its projected capital spending for this year by 62 percent, a new high, in an attempt to satisfy customer demand for advanced technologies in the production of central processing units, high-performance-computing (HPC) devices and 5G applications. After investing US$17.24 billion last year, TSMC this year plans to spend US$25 billion to US$28 billion on manufacturing equipment and new facilities, including a fab in the US. About 80 percent of the budget would be allocated for developing advanced technologies including 3, 5 and 7-nanometer technologies, the company said. The larger-than-expected capital spending prompted speculation
Norway’s oil and gas reserves have made it one of the world’s wealthiest countries, but its dreams for deep-sea discovery now center on something different. This time, Oslo is looking for a leading role in mining copper, zinc and other metals found on the seabed and in hot demand in green technologies. The country could license companies for deep-sea mining as early as 2023, the Norwegian Ministry of Petroleum and Energy said, potentially placing it among the first countries to harvest seabed metals for electric vehicle batteries, wind turbines and solar farms. However, that could also place it on the front line of