Local market backed by sound fundamentals: finance minister
July 27, 2014, 12:01 am TWN
TAIPEI--Taiwan's sound economic fundamentals are expected to continue to lend support to the local bourse, Finance Minster Chang Sheng-Ford said Saturday.
Taiwan's economy is on the road to recovery, Chang said, citing improving economic data such as export orders and the composite monitoring indicator, which suggests that the country's stock market will continue to perform well.
Taiwan's export orders gained ground in June for the fifth consecutive month, rising 10.6 percent year-on-year to US$38.82 billion.
Orders placed for electronic products and information and communications technology products were up 17.0 percent and 8.8 percent, respectively.
In addition, several economic think tanks have raised their forecasts for Taiwan's economic growth in 2014 to more than 3 percent.
Academia Sinica, Taiwan's top research institution, raised its forecast of the country's economic growth for 2014 on July 10 to 3.31 percent from an earlier estimate of 2.89 percent.
The benchmark weighted index on the Taiwan stock exchange closed down 0.92 percent at 9,439.29 Friday as investors locked in gains following a strong showing by local shares in recent sessions.
For the year to date, the benchmark index has risen 9.61 percent.
Chang made his comments on the sidelines of the three-day national economic convention which kicked off Saturday. The national economic meeting aims to discuss Taiwan's economic strategies in an era of globalization.
Even before Chang expressed his confidence in Taiwan's stock market Saturday, several foreign institutional investors predicted that the market's weighted index could challenge 10,000 points this year.
One of the optimistic foreign brokerages, Citigroup Global Markets, forecast the weighted index to breach 10,000 points and even hit 10,500 points by the end of this year.
Tseng Ming-chung, chairman of the Financial Supervisory Commission, said he had faith in the stock market's prospects because of the ample liquidity in the market and high expectations that economic growth will surpass 3 percent this year.
Net foreign fund inflows into Taiwan's equity market increased by US$744 million in the first three weeks of July, indicating that foreign institutional investors were continuing to move funds into the country, Tseng said.
With foreign investors continuing to inject funds into the local bourse, Tseng said the FSC will keep a close eye on those funds to prevent any negative impact on the economy from foreign hot money.