Taiex unlikely to challenge 2018 high this year: UBS Securities

Taipei, The benchmark weighted index on the Taiwan Stock Exchange or the Taiex is unlikely to challenge the highpoint of 2018 this year, as the market remains concerned by unfavorable external factors, according to UBS Securities.

Speaking to the press Tuesday, William Dong head of UBS Securities Taiwan, said after an up and down 2018, the local equity market is expected to see further volatility in 2019 and another tough year for investors.

Dong said negative factors such as tension between the United States and China, the slowdown of China's economy, the second largest in the world, and slower emerging economic growth are expected to continue to undermine equity investor sentiment and impact equity prices this year.

In 2018, the Taiex hit an intraday high of 11,270 points on Jan. 23 and a closing high of 11,253 on the same day.

Dong said he feared that given the unfavorable circumstances the Taiex will not hit the heights seen in 2008.

The Taiex remained above the 10,000-point mark for most of the year before the main board encountered turmoil in October, when trade tension between the United States and China struck global investors and the rate hike cycle by the U.S. Federal Reserve hit market sentiment.

On Oct. 11, the Taiex fell 660 points to close at 9,806.11, the first time the index had ended below the 10,000-point level since May 2017. In October alone, the main board fell 1,204 points.

Since Oct. 11, the Taiex has closed below 10,000 points on all but three days -- Oct. 12, Dec. 3 and Dec. 4.

In 2018, the Taiex fell 8.6 percent, ending the year on 9,727.41 points.

On Tuesday, the main board rebounded by 1.01 percent to end at 9,806.04.

In November, UBS Securities forecast the Taiex would rise as high as 10,200 points, but Dong said based on the current global situation, that was an optimistic assessment.

Foreign institutional investors registered net sales of about NT$350 billion US$11.36 billion worth of shares in Taiwan in 2018, Dong said, adding that he expected selling to be weaker in 2019.

Meanwhile, Dong said listed companies in Taiwan could post a 5 percent year-on-year increase in earnings in 2019, but negative external factors could still lead to that earnings growth forecast being revised downwards.

Taiwan's economy is expected to grow more than 2 percent in 2019, he added.

On Nov. 30, the Directorate General of Budget, Accounting and Statistics said it had cut its estimate for Taiwan's GDP growth in 2018 by 0.03 percentage points from a forecast in August to 2.66 percent and downgraded its forecast for 2019 by 0.14 percentage points to 2.41 percent.

Source: Focus Taiwan News Channel