The local stock market could rally this week as investors might increase holdings of large-cap electronics, biology and green energy stocks after President Tsai Ing-wen’s (蔡英文) landslide re-election on Saturday, analysts said.
With political uncertainty cleared, the TAIEX might “be driven by a post-election boost and stage a rebound this week, as historical records have shown,” Jih Sun Securities Investment Consulting Co (日盛投顧) president Kevin Chung (鐘國忠) said yesterday.
In the five days after the previous four presidential elections, there was a 50 percent chance that the TAIEX would climb, while the odds rose to 75 percent 10 days following the elections, Taiwan Stock Exchange statistics showed.
“The TAIEX’s rally should be insignificant, as investors are usually cautious about increasing holdings to prevent capital from being locked up during the Lunar New Year holiday later this month,” Chung said.
The stock market is to suspend trading from Tuesday next week until Jan. 30 for the holiday.
On Friday last week, the TAIEX gained 0.45 percent to 12,024.55 points.
The TAIEX would likely be traded in the range of 11,500 to 12,500 points this quarter, Jih Sun said in a report released before the elections.
The index climbed to 12,157 points during the mid-session of Jan. 3, approaching the all-time high of 12,682 hit in 1990, which might be difficult to breach, given the geopolitical tensions in the Middle East and the unfavorable global macroeconomy, Chung said.
Investors might also favor small-cap biology and green energy-related stocks, as the Tsai administration has been pushing for major industrial and energy transformation during her first term and would likely continue this policy, Jih Sun said.
However, the election results might deal a blow to construction, property development and tourism stocks, as cross-strait trade ties might not relax in the short term, Jih Sun added.
Investors would also be focused on earnings reports from key US technology firms, such as Intel Corp and Apple Inc, as well as the performances of the Dow Jones and S&P 500 on Wall Street, Chung said.
Foreign investors are likely to bet on large-cap stocks with rosy financial outlooks, such as chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), camera lens supplier Largan Precision Co (大立光) or MediaTek Inc (聯發科), which competes with Qualcomm Inc in 5G chips, he said.
The movements of those stocks are closely linked with the ups and downs of global supply chains and the world’s major stock markets, he added.
TSMC is scheduled to hold an investors’ conference on Thursday and its outlook would be a key factor affecting the TAIEX’s movements in the near term, Chung said.
On Friday, the chipmaker reported record-high revenue of NT$317.24 billion (US$10.57 billion) for the fourth quarter of last year, and its revenue for the whole of last year increased 3.7 percent to NT$1.07 trillion from a year earlier, beating its earlier forecast of an increase of 1 to 3 percent for the year.
Last week, Standard Chartered PLC said it favored Asian emerging markets and especially liked Taiwan’s semiconductor stocks, as they would benefit from easing US-China trade tensions.
Political factors were not a major consideration, it added.
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