The TAIEX could see a moderate correction before the Lunar New Year holiday, barring major economic catalysts, analysts said.
Jih Sun Securities Investment Trust Co (日盛投信) fund manager Paul Tsai (蔡昀達) said that markets in Switzerland, Singapore and other nations have taken measures to prevent inflows of “hot money” following the European Central Bank’s stimulus package.
No major activity is expected ahead of the holiday since the US Federal Open Market Committee repeated last month that it would hold off on deciding when to raise its benchmark interest rate from zero, Tsai said.
Allianz Global Investors Taiwan Ltd (德盛安聯證券投信) fund manager Corrina Xiao (蕭惠中) said the TAIEX has been boosted by inflows resulting from the European Central Bank’s stimulus measures and upbeat quarterly results and forecasts from leading Taiwanese electronics firms.
With less than three weeks before the Lunar New Year holiday, investors are becoming cautious toward the local bourse, leading to moderate corrections in the TAIEX, Xiao added.
In related news, there might be a near-term boost for property sector stocks as the government is intending to ease up on its push for tax reform on property transactions, which is expected to ease concerns over expected higher tax payments, analysts said.
Last week, the Ministry of Finance submitted a proposal to the Cabinet that would subject home sellers to a flat tax rate of 17 percent after the government implements a new tax scheme instead of the previous proposal that would have levied a progressive tax of up to 45 percent.
In addition to the lower tax rate, the ministry’s proposal stipulates that only sellers who obtained property after 2011 would be subject to the new taxes, while properties selling for less NT$20 million (US$634,920) would be exempt from the new tax or eligible for a tax reduction.
Evertrust Rehouse Co (永慶房屋) researcher Andy Huang (黃舒衛) said that the flat rate could stabilize the market after the progressive tax “shock,” while the new tax proposal could also help reduce speculation.
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