STABLE ECONOMIC POLICIES:
Canceling the referendums would boost the stock market and “help the nation get back into the international community,” one analyst said.
By Chen Cheng-hui / Journalist
Market watchers said they were positive about the performance of local stocks after all four elements of the referendum were rejected by a narrow margin on Saturday, helping to dispel market uncertainty over the country’s economic policies. government.
Although the administration of President Tsai Ing-wen (蔡英文) may continue its policies on pork imports and energy transition after the vote, stock market movements still depend on corporate profits and the country’s economic fundamentals, analysts said.
Despite a low turnout, voters rejected four referendum questions that asked whether to ban imports of pork containing traces of the leanness-improving additive ractopamine, relocating a liquefied natural gas terminal project off the district from Guanyin to Taoyuan (觀音), restart construction of the fourth nuclear power plant in the Gongliao district of New Taipei City (貢 寮) and hold referendums in parallel with the elections.
Hsieh Chin-ho (謝 金 河), president of Chinese-language magazine Wealth, said dark clouds hung over the nation after the referendums were launched, but the skies are starting to brighten with the results.
“This will bring a positive force to Taiwan’s future economic development and help the country return to the international community,” Hsieh wrote on Facebook on Saturday. “The dynamics of the stock market will also increase. It is also the time of Taiwan’s economic renaissance.
Capital Management Co chairman (統一 投 顧) Li Fang-kuo (黎方國) agreed, telling the central news agency on Saturday that the outcome dispelled many uncertainties, which is good for the stock market.
On Friday, TAIEX closed 0.15% higher at 17,812.59 points. So far this year, the index has risen 20.91%, according to data from the Taiwan Stock Exchange.
Compared to US stocks, Taiwanese stocks have performed relatively well this year, which Li attributed to corporate earnings and the country’s macroeconomic environment.
While some other factors caused short-term fluctuations, their effects were limited, he said.
The central bank on Thursday raised its GDP growth forecast to 6.03% for this year and forecast a 4.03% increase for next year. The upward revisions came after the Directorate-General for Budget, Accounts and Statistics on November 26 raised its GDP growth forecast to 6.09% and forecast an expansion of 4.15% for the next year.
Li said the figures suggest the economy will remain strong next year.
Regarding corporate profits, listed companies are expected to achieve a combined profit of NT $ 4.1 trillion (US $ 147.59 billion) this year, which would increase 5% to NT $ 4.3 trillion on the year. next year, he said.
President Capital is focusing on financial sector stocks, as their valuation could benefit from potential monetary normalization by central banks next year, in particular the US Federal Reserve, as well as “conceptual Apple stocks”, stocks to high dividend yield and those with greater exposure to the “metaverse” and electric vehicle market.
Cathay Futures Consultant Co (國泰 證 期 顧問) analyst Tsai Ming-han (蔡明翰) said the referendum results would have little impact on the stock market as investors worry more about issues related to transactions of listed companies.
A recent correction in TAIEX has more to do with capital flows, he said.
As the Fed signaled its intention to carry out monetary tightening next year, this would lead to a return of capital to the United States, causing the US dollar to rise and pressure on local market liquidity in the near term, a Tsai said.
Taiwanese stocks would still face a period of near-term consolidation, but buying opportunities would emerge as soon as TAIEX nears its monthly moving average of 17,678 points to limit the market decline, Cathay Futures said, adding that local actions would have greater momentum. as more and more foreign institutional investors turn to the buy side.
The chairman of the Securities Investment Trust and Consulting Association, Jeff Chang (張錫), said Thursday that he remained positive on local stocks.
Chang told the Chinese-language Liberty Times (sister newspaper of the Taipei Times) that the price-to-earnings ratio on the Taiwan Stock Exchange is relatively low, but the dividend yield ratio remains high among listed companies.
Listed companies would also continue to benefit from a semiconductor shortage, growing 5G and electric vehicle business opportunities, and the arrival of metaverse-based applications, Chang said.
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