Equity shares in Taiwan forecast to climb on high liquidity

Taipei-Share prices on Taiwan's equity market are likely to move higher, driven by high liquidity, as foreign institutional investors return to the trading floor from the New Year holiday, analysts said Saturday.

The liquidity-driven gains are expected to continue, following the main board's gains in the first four trading sessions of 2018 after last month's consolidation period, dealers said.

Since the beginning of the year, the weighted index on the local main board has climbed 236.94 points, or 2.23 percent, with the weighted index ending at 10,879.80 points on Friday.

In the first trading week of the year, foreign institutional investors bought a net NT$21.33 billion (US$723 million) worth of shares on the main board.

Liao Che-hung (???), manager of Allianz Global Investors Taiwan Technology Fund, has forecast that foreign institutional investors will continue to move funds into the local equity market as the profitability of many enterprises improve amid domestic economic growth.

Furthermore, with global market sentiment on the rise, foreign institutional investors are expected to pour more funds into the region, which will benefit the Taiwan market, he said.

In a similar forecast, Lin Chia-hsin (???), a manager at Jih Sun Top Five Fund, said the earnings of companies listed on the local main board and the over-the-counter market are expected to show first-quarter growth of 30 percent year-on-year, after which the rate will moderate.

The high earnings growth in the first quarter is likely to attract funds to Taiwan's equity market, he said.

Lin predicted that investors this year will pour money into the bellwether electronics sector and old economy stocks, in particular the construction, steel, petrochemical and cement sectors.

With raw material prices rising, the broader market will be able to ride the waves of rotational buying, he said.

In the global equity market, however, the liquidity-driven gains will likely moderate later in the year if the U.S. Federal Reserve continues in 2018 to raise interest rates and cut its balance sheet by lowering its bond holdings, Lin said.

Source: Focus Taiwan News Channel