The Taiwan stock market’s bullish run last year could continue this year, as the US Federal Reserve is expected to begin cutting interest rates as inflation weakens, Jih Sun Securities Investment Trust Co (日盛投信) said on Saturday.
The fundamental outlook for the domestic stock market this year is positive, as the Fed’s anticipated cuts would draw investors away from US dollar-denominated assets toward emerging markets, including Taiwan’s, Jih Sun said in a statement.
Evidence of that was already seen last month, as the net purchase of shares on the Taiwan Stock Exchange by foreign institutional investors was a record high for the month of December, it said.
Photo: CNA
That helped conclude a banner year for the exchange, which saw an increase in market capitalization of NT$12.73 trillion (US$414.19 billion), while its benchmark TAIEX gained 26.7 percent.
The TAIEX’s full-year gain of 3,793 points last year overtook the 3,596-point growth recorded in 2009 to become the second-largest annual increase in its history, trailing only the 4,505-point leap recorded in 1989 when the exchange was just starting off.
Backed by solid fundamentals, the main bourse is expected to benefit further from growth prospects in the artificial intelligence (AI) supply chain, fostering optimism about its performance this year, Jih Sun said.
Other indicators also bode well for investors, the company said, citing data from Taiwan’s top economic planning body.
CONDITIONS IMPROVE
The composite index of economic indicators jumped four points in November from a month earlier to 20, vaulting it into the yellow-blue category, indicating sluggish conditions, data released last week by the National Development Council showed.
The index had languished in the blue category for most of last year, signaling an economic contraction.
Nomura Asset Management Taiwan Ltd (野村投信) said positive market sentiment is likely to continue in the first quarter of this year, citing the accelerated inventory digestion among firms, as well as better prospects for Taiwan’s economy and listed firms this year.
The nation’s GDP is expected to fare better this year with growth of 3 percent, compared with an anticipated 1.4 percent increase for last year, Nomura said in a statement on Wednesday, citing the Chung-Hua Institution for Economic Research’s (中華經濟研究院) forecast.
EARNINGS GROWTH
The companies listed on the Taiwan Stock Exchange and the over-the-counter Taipei Exchange are expected to see a return to double-digit percentage earnings growth this year, with technology stocks — especially those related to AI — looking more attractive, Nomura said.
As shipments of products linked to AI continue to increase, related industries and companies in Taiwan are expected to benefit from the trend and report solid first-quarter financial results, it added.
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