The TAIEX might rally to 26,800 points in the first half of next year, uplifted by major tech firms led by Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) that would continue to benefit from strong global demand for electronics used in artificial intelligence (AI) applications, SinoPac Financial Holdings Co (永豐金控) said on Wednesday.
The forecast suggests a 15 percent gain from yesterday’s close at 23,267.94. The TAIEX, which closed up for a fourth straight session yesterday, has jumped 29.69 percent so far this year, Taiwan Stock Exchange data showed.
TSMC, the world’s largest chip maker, is expected to see its business grow 20 percent, thanks to its technology leadership and active spending by US cloud service providers on AI development, SinoPac chief economist Jack Huang (黃蔭基) said at a news conference in Taipei.
Photo: CNA
“Once TSMC shares rally above the previous high of NT$1,110, the TAIEX would emerge from consolidation and make a new record,” said Golden Huang (黃柏棠), an executive vice president at SinoPac Securities Investment Service Corp (永豐投顧).
Positive corporate earnings growth and healthy inventory levels would also lend support to the benchmark index before an anticipated tariff hike by the US hitting the market later in the year, he said.
Corporate profit growth next year would reach as high as 57 percent in the first quarter, but slow to 17 percent in the final quarter on an annual basis, he added.
Still, Taiwan’s fund houses would replace foreign institutional players in setting the TAIEX direction, as the fever for exchange-traded funds would be sustained, the company said.
SinoPac Financial also forecast Taiwan’s GDP would grow quarter by quarter next year — from 1.67 percent in the first quarter and 2.42 percent in the second quarter to 3.01 percent in the third quarter and 4.61 percent in the fourth quarter — with a full-year growth of 2.96 percent, Jack Huang said.
The global economy would face more uncertainties and challenges next year as US president-elect Donald Trump returns to the White House and puts his tariff threats into action, he said.
“Trump will definitely increase tariffs on imports from around the world, though the amount would vary depending on specific items and their origins,” he said.
The tariff hikes would fuel inflation, making the US Federal Reserve hesitant about cutting interest rates in the fall of next year, said Sharon Lin (林秀貞), an executive vice president at SinoPac Securities.
The Fed would go ahead and lower interest rates by 25 basis points in the first and second quarter, as US consumer prices move toward the 2 percent target before the tariffs come into play, Lin said.
By contrast, Taiwan’s central bank would keep interest rates unchanged for all of next year, as rate cuts would send an easing signal and boost real-estate lending, at odds with its effort to guide money away from real estate, she said.
The US dollar would remain strong on the back of Trump’s protectionist practices, a welcoming trend for export-oriented economies including Taiwan, as a weak New Taiwan dollar would make Taiwanese products more competitive on the world stage, SinoPac Financial said.
Cathay Financial Holding Co (國泰金控) is also optimistic that the TAIEX would climb above 25,000 points next year on the back of GDP growth of 3 percent, the company said last month.
However, a potential tariff hike under Trump and a high comparison base this year are set to be the two key factors shaping the local equity market next year, Cathay United Bank (國泰世華銀行) lead economist Lin Chi-chao (林啟超) said on Nov. 19.
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