Feb 01, 2017 General Comments Off on Taiwan shares forecast to rise but move in narrow range after holiday
Taipei-- The equity market in Taiwan is likely to gain on Thursday, the first trading day after the Lunar New Year holiday, on the back of high liquidity, market analysts said Wednesday.
However, volatility on Wall Street due to concerns over U.S. President Donald Trump's policies and worry about the ongoing earnings season in the U.S. market could prevent investors here from buying heavily, thus limiting the market movement, the analysts said.
The Taiwan main board has been closed since Jan. 25 for the Lunar New Year holiday and will reopen Thursday.
On Jan. 24, the weighted index closed at 9,447.95 points, 17.18 percent or 1,384.95 points higher than at the end of the previous lunar year.
The solid gains largely came from aggressive buying by foreign institutional investors as they rushed to move funds into the region.
Kevin Lin (???), vice president of investment consultant firm Caizischool Co., said the liquidity driven gains are likely to continue on the first trading day of the new lunar year, with a 60-70 percent chance of the weighted index climbing.
Lin said the local equity market is expected to benefit from continued fund inflows into the region as regional currencies appreciate, in particular after U.S. President Trump expressed concerns that a stronger U.S. dollar may adversely affect the competitiveness of U.S. exporters.
In addition, an improvement of Taiwan's fundamentals in reflection of recovering exports is likely to lend additional support to local share prices, Lin said. According to the latest government figures, the domestic economy grew 2.58 percent year-on-year in the last quarter of 2016, beating the forecast of a 2.37 percent increase.
For the entire 2016, Taiwan's economy grew 1.40 percent year-on-year, again higher than the estimated 1.35 percent.
Lin said, however, that due to the high comparison base in the last lunar year, the upturn on the first trading day Thursday may appear limited.
Meanwhile, MasterLink Securities Investment Advisory Co. President Liu Kun-hsi (???) said he was worried that Wall Street may be facing headwinds in the wake of Trump's executive order to ban citizens of seven Muslim-majority countries from entering the U.S.
The travel ban has raised fears of greater protectionism in the U.S. and dragged down the Dow Jones Industrial Average from a record high of over 20,000 points on Jan. 25.
Liu said the global financial market was shadowed by uncertainty over the policies of Trump, who has vowed to put America first, a protectionist approach that could hurt global trade.
The current earnings season on Wall Street could create more volatility in the U.S. market as sentiment has already been dampened by a poor earnings report released by Exxon Mobil Corp. Tuesday, Liu said.
He suggested that investors keep a close eye on the performance of Apple Inc. shares after the company's quarterly results are released Wednesday, since that will affect the share prices of many Taiwanese suppliers to the U.S. firm Thursday.
On Tuesday, Apple reported that its net profit for the October-December 2016 period fell 2.6 percent from a year earlier, although its sales hit a record high during that period.
Source: Focus Taiwan News Channel
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