Taipei, Dec. 2 (CNA) The Taiwan Stock Exchange's (TWSE) benchmark index will likely challenge and surpass its historical high in the first quarter of 2020 because of an improving economy and strong market liquidity, an expert said Monday.
Hsiao Chien-hsiang (蕭乾祥), chairman of Fubon Securities Investment Services Co., said at an investment forum that Taiwan has relatively sound economic fundamentals compared with neighboring countries, and its stock market should continue to flourish.
He pointed to Taiwan's expected 2.64 percent growth in 2019, which would beat the 1.7 percent growth forecast for South Korea, 0.5 percent growth projected for Singapore, and 0.9 percent growth anticipated for Japan as forecast by IHS Markit.
Taiwan's economy is also expected to grow 2.72 percent in 2020, Hsiao said, citing the Directorate General of Budget, Accounting and Statistics (DGBAS).
Those fundamentals should help the Taiex surpass the historical intraday high of 12,682, set on Feb. 12, 1990, early in 2020, he predicted.
On Monday, the Taiex closed up 0.12 percent at 11,502.83. Since the beginning of this year, it has gained 1,775.42 points, or 18.25 percent, largely helped by large foreign fund inflows.
Hsiao cited several factors that have helped Taiwan's economy and made its stock market attractive to foreign investors, including how Taiwan has benefited from the "diversion effects" of the trade war between Washington and Beijing.
Many Taiwanese companies have diverted their production of goods exported to the United States from their manufacturing bases in China back to Taiwan to avoid the punitive tariffs the U.S. has put on Chinese made goods, leading to a nearly 20 percent surge in exports from Taiwan to the U.S. this year.
The stock market, Hsiao said, is expected to continue to benefit from dividend yields in Taiwan ranging between 3 and 4 percent that have appealed to foreign institutional investors.
The electronics sector will also drive gains in the Taiex as large tech companies continue to invest in Taiwan, he said.
At a time when the global tech industry is gearing up to pursue 5G technology, Taiwan's semiconductor industry and related component makers are expected to benefit from the trend and see their share prices grow, he contended.
Hsiao was speaking at an investment forum organized by Fubon Financial Holding Co., the parent company of Fubon Securities Investment Services.
At the same forum, Fubon Financial's chief economist Lo Wei (羅瑋) said Taiwan's economy should also benefit from its efforts in developing artificial intelligence and new tech applications that could help Taiwan upgrade its industrial sector.