Progress on ECFA the major risk for bourse in 2014: Kurz
By Kathryn Chiu, The China Post
January 3, 2014, 12:02 am TWN
TAIPEI, Taiwan -- “Mr. Taiwan” Peter Kurz (谷月涵) recently pointed to the progress of the Taiwan-China Economic Cooperation Framework Agreement (ECFA) as the major risk for Taiwan's share market in 2014, despite a multitude of good signs.
Kurz is the managing director and head of research of Citigroup Global Markets Taipei Securities and has been dubbed by local media as “Mr. Taiwan” to honor his status as an investment guru.
At the invitation of the American Chamber of Commerce (AmCham), Kurz will share his insights on Taiwan's economic outlook at a special luncheon on Jan. 7.
According to AmCham's dispatch, Mr. Taiwan argues that Taiwan's gross domestic product (GDP) would achieve annual growth above 3 percent in 2014.
Meanwhile, new industries — biotech in particular — are emerging, while others, such as retail, enter into a renewed growth phase. All this bodes well for stock market prospects, but the upside may still be limited by high valuations.
Moreover, much of next year's GDP growth forecast is predicated on a continued recovery in capital formation which, in the past, has been highly influenced by progress on ECFA. This may, in the end, be the highest risk factor to the outlook for 2014.
Taiwan GDP to Follow Steady 1-2-3 Trajectory: Kurz
Taiwan's economic growth will likely grow on a steady 1, 2 3 trajectory — 1.3 percent in 2012, 2.0 percent in 2013 and 3.2 percent in 2014 — as global export markets gradually recover from the 2011 downturn, according to Kurz's forecast.
Concurrently, Economic Daily of Taiwan, a sister-paper of the United Evening News, earlier published an analysis, naming the possible exit of the U.S. Federal Reserve's bond-buying program — or quantitative easing policy (QE) — as the greatest risk to Taiwan's economy in 2014.
Over the past several years, emerging economies have been the greatest beneficiaries of the U.S. money-printing operations, which have introduced hot money into these markets. But chances are that the QE policy may end sometime between late 2014 and mid 2015, according to Economic Daily.
In China, the bursting of the housing bubble could trigger a systematic financial crisis. In light of the expanding trade between Taiwan and Southeast Asian nations and Taiwan's inseparable economic ties with China, the impact of the QE phase-out on Southeast Asia and China will likely affect Taiwan.
The government must strengthen its efforts to revitalize the economy, especially by encouraging investment to improve industry structure, to rebuild Taiwan's economic competitiveness, Economic Daily said.