SinoPac Financial Holdings Co (永豐金控) yesterday forecast that the nation’s economy would gradually recover from this year’s slump to grow at 2.45 percent next year.
While the value of export orders this year is expected to decline 9.6 percent annually to dip below US$37.5 billion, the figure is anticipated to rebound to above US$40 billion next year, as demand begins to recover in Europe and the US, Sinopac Financial Holdings chief economist Jack Huang (黃蔭基) told an economic forum in Taipei.
However, a continued correction in the domestic housing market and the rise of China’s ‘red supply chain’ would continue to limit the nation’s economic growth, Huang said.
Political uncertainties over next month’s presidential and legislative elections would also affect the stock market, he said.
“We foresee the TAIEX would hit a low point at 7,900 points in the first quarter next year, and reach its annual ceiling at 9,500 points in the third quarter, the peak period for companies’ earnings,” Huang said.
The central bank also might lower its policy rates by half a basis point to about 1.625 to boost exports, which could lead to the New Taiwan dollar depreciating more in the first half of next year, before strengthening in the second half, he said.
Even so, the nation’s industrial landscape could see sweeping changes amid a persistent slump in global demand, with investments shifting toward the biotechnology and green energy sectors, while the financial, technology, and traditional industries begin to lose favor with investors, Huang said.
Investors might consider technology sector bluechips, such as shares for leading semiconductor, industrial computer, and upstream optoelectronic suppliers, said Telan Chen (陳德蘭), senior vice president of Taiwan equity research at SinoPac Securities Investment Service Co (永豐投顧).
Other viable investments include textile and shoe makers with production bases in Vietnam, which are poised to benefit from Hanoi’ inclusion in regional trade blocs, and companies that are well positioned to capture opportunities from China’s lifting of its one-child policy, and its drive toward industrial automation, renewable energy, and environmental protection, Chen said.
“Next year will mark the beginning of a new order across markets worldwide,” Huang said.
With its “one belt, one road” and Asian Infrastructure Investment Bank initiatives, as well as the inclusion of the Chinese yuan into the IMF’s special drawing rights reserve, China has become a superpower, Huang said.
He also expects major economies’ monetary policies to begin diverging from the US’ footsteps, citing as one example that the EU is expected to step up quantitative easing measures to curb deflation once the US Federal Reserve raises interest rates.
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