Equity investors earned an average of NT$960,000 (US$34,532) in 2021 after the Taiex, the weighted index on the Taiwan Stock Exchange (TWSE) surged more than 23 percent annually.
The Taiex rose 3,486.31 points or 23.7 percent from the end of 2020 to close at 18,218.84 points on Dec. 30, the last trading session for 2021, boosting the main board's market capitalization by NT$12 trillion to NT$56 trillion. The 2021 rise in the index was the third highest annual growth in the TWSE's history.
Based on the number of investors with equity transaction accounts hitting 11.96 million at the end of November, they earned about NT$960,000 on average, benefiting from the soaring Taiex.
On Dec. 30, the last trading session for 2021, the Taiex lost 0.16 percent after hitting an historical intraday high of 18,291.25 points, but the main board still performed strongly for 2021 as a whole.
According to data tallied by the Financial Supervisory Commission (FSC), the top financial regulator in Taiwan, the Taiex ended above 17,000 points on 135 trading sessions in 2021, accounting for 55 percent of total trading sessions.
In addition, the Taiex closed above 18,000 points on five trading sessions in 2021, with the index ending below 10,000 points on no trading sessions. In the last trading week, the Taiex repeatedly hit intraday highs. On Dec. 29, the Taiex ended at an historical high of 18,248.28 points.
Although foreign institutional investors sold a net NT$454 billion worth of shares in Taiwan in 2021 amid concerns over COVID-19, lingering tensions between the United States and China, and a move by major central banks around the world, particular the U.S. Federal Reserve to tighten monetary policies, local investors rushed to fill the void and pushed up the Taiex throughout the year, dealers said.
Local investors favored the old economy sector with shipping and steel stocks in focus. In the transportation sector, with many major shipping stocks, Evergreen Marine Corp., the largest container shipper in Taiwan, jumped almost 170 percent in 2021.
The transportation sector took a pause in the second half of the year after steaming ahead in the first half, but the tech sector received a boost from rotational buying in the second half, led by contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock on the local market, dealers added.
In 2021, the average daily turnover on the local equity market totaled about NT$476.3 billion, up 88.7 percent from NT$252.41 billion in 2020.
After a robust increase in the Taiex last year, dealers said market sentiment has turned upbeat and they expect the local main board to see "January effects," which refers to a seasonal rise in the market after foreign institutional investors return to the trading floor following the New Year holiday.
Alex Huang (???), an analyst with the Mega International Investment Services Corp., said it is possible the Taiex could rise 1,500 to 2,000 points and hit 20,000 this year.
Huang said while economic growth and increases in corporate profits are expected to moderate in 2022, due to a relatively high comparison base in 2021, the impact from the pandemic and a global chip shortage could weaken.
The analyst said the bellwether electronics sector could lead the broader market higher, riding the wave of January effects.
However, Huang also cautioned that as the Taiex approaches 20,000 points, it is likely to encounter a technical pullback of 10-15 percent.
Liu Kun-hsi (???), chairman of Shin Kong Investment Trust Co., who also expects January effects, said he favored semiconductor stocks, saying investors should pay close attention to TSMC and the company's suppliers.
Chang said rotational buying is likely to dominate the local main board, with chemical raw material suppliers and financial stocks likely to benefit from the trend.
Source: Focus Taiwan News Channel