Taipei, April 29 (CNA) Experts gave mixed forecasts Sunday for the performance of the TAIEX, which has been seeing low trading volumes recently.
Dachrahn Wu, Research Center director for Taiwan Economic Development at National Central University, said if trading volumes continue to shrink, investors would become more pessimistic toward stock investments.
Wu said the stock market is a financing channel for enterprises, so a poorly performing stock market may affect companies' financing directly.
The biggest problem currently facing the domestic market is a lack of cash flow amid the debate over the government's plans to introduce a capital gains tax on stock investments, Wu said.
The shrinking trade volumes may not only result in lower revenue from securities transaction taxes but could also affect the country's economic development in the long term, he said.
According to the latest Consumer Confidence Index (CCI) compiled by the center, the stock market confidence sub-index has dropped 5.4 points to 59.1 points.
The CCI benchmark gauges public expectations about the stock market, household finances, durable goods, job opportunities, consumer prices and the economic outlook for the next six months.
The average trading volume in the period Jan. 16 to March 28 remained stable at NT$120 billion (US$4.10 billion), according to statistics released by the Financial Supervisory Commission.
However, the figure has dropped by about NT$40 billion to NT$80.3 billion since March 28 when a government panel held its first discussion on the capital gains tax plan, said the top financial regulator.
Meanwhile, Tai Chao-yang from the Taiwan Research Institute was more optimistic, saying that despite the recent low volumes, the index has been ranging between 7,500 points and 8,000 points since March 28, which means that the decline has not been that sharp.
A rally can be expected in the short term, he said.
(By Lin Hui-chun and Hanna Liu)