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Asian stock brokerage firm trims Taiex forecast

Asian stock brokerage firm trims Taiex forecast

An Asia-based brokerage firm trimmed its forecast for the Taiex -- the Taiwan stock exchange's benchmark index -- from 9,000 to 8,800 points next year, citing concerns over a possible shift in the new government's China policy that might hurt Taiwanese competitiveness.

The anonymous brokerage said in a research report on trading strategies for Taiwan's stock market that the government to be formed next year might not adopt an open-door policy toward cross-Taiwan Strait engagements and investment projects that could negatively affect Taiwan enterprises' competitiveness and the country's opportunities to join regional economic integration.

The firm said that uncertainty over changes in government policies after Taiwan's new government takes office next year and many signs of poor outlook for the technology industry have prompted it to revise downward its forecast for the stock market next year.

If the new administration is hesitant to adopt a more open-door policy toward cross-strait investment projects, this could not only affect Taiwanese companies' competitiveness but also hurt Taiwan's chances of joining the Trans-Pacific Partnership and the Regional Comprehensive Economic Partnership (RCEP) trade agreements, according to the brokerage, adding that it therefore slashed its 2016 target for the Taiex.

The brokerage said that although Taiwan's semiconductor companies have become Chinese enterprises' main targets for mergers and acquisitions, the government might not lift a ban on Chinese investment in the sector.

Looking ahead to 2016, the brokerage is generally upbeat about the automotive, unmanned aerial vehicle, Internet of things and e-commerce industries.

However, Asian markets closed up last week after the U.S. Federal Reserve raised interest rates for the first time in almost a decade. In Asia, Taiwan has emerged as the most attractive market in 2015, having attracted foreign capital of more than US$3.2 billion this year.

JP Morgan Asset Management fund manager James Yeh said that the U.S. interest rate hike signals an ongoing recovery of the U.S. economy and increasing confidence in the labor market, adding that Taiwanese companies relying on exports to the U.S. are expected to benefit from the improving U.S. economy. (By Jeffrey Wu, Tien Yu-pin and Evelyn Kao)

Updated : 2021-09-23 06:06 GMT+08:00