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QE3 to affect Taiwan's stock market 1-2 months: analyst

2012/09/15 19:00:57

Taipei, Sept. l5 (CNA) The United States Federal Reserve's third round of quantitative easing (QE3) to boost the economy will affect Taiwan's stock market for one to two months, a senior analyst at UBS Securities Taiwan predicted Saturday.

The quantitative easing policy will also likely benefit stocks of companies in the construction sector and those with high tangible assets more than any others, said William Dong, head of research at the Swiss firm. Fed Chairman Ben Bernanke announced in Washington D.C. Thursday that the U.S. central bank will spend US$40 billion (NT$1.18 trillion) to buy mortgage-backed securities every month for however long it deems necessary.

The measure boosted stocks worldwide. The Taiwan Stock Exchange's weighted index closed up 2.1 percent Friday at 7,738.05, its highest close since April.

Dong said QE3 will promote the flow of capital in the short term, which will indeed help Taiwanese stocks.

In the middle and long term, however, the impact of the money-easing policy will be decided by the strength of economic recovery, said Dong, who did not anticipate big changes in Taiwan's economic situation over the next six months.

The market analyst also expected that QE3 will lead to the appreciation of the Taiwan dollar, but by a lesser degree than during the previous two rounds of quantitative easing, which were launched in 2008 and 2010 respectively.

The Taiwan dollar gained 4.8 percent during QE1 from November 2008 to March 2010 and about 6 percent during QE2 from November 2010 to June 2011.

(By Wu Ching-chun and Elizabeth Hsu)