TAIEX to reach 9,000 in fourth quarter of 2013: Merrill Lynch

The weighted index yesterday closed at 7,755.09, down 50.9 points from the previous trade.

In its latest report, Merrill Lynch gave an upbeat overview for 2013, in which the institutional investor said stocks will hit 8,500 during the first quarter and then hover between 7,300 and 7,700 in the second and third.

Then in the fourth quarter, the TAIEX is expected to hit 9,000, the highest estimate given by any institutional investors thus far this year.

Most analysts have forecast that the TAIEX may come close to 8,500 yet will not go over it due to the stock capital gains tax, which levies a tax on those selling their holdings after the TAIEX exceeds 8,500. It is therefore expected a selling spree will emerge before 8,500, popularly known as a “heavenly cap” in Taiwan's securities-trading circle.

Merrill Lynch based its optimism on the prospect Taiwan's economy will improve in 2013, which the institutional investors referred to as a “year of reform.”

“From now till the special municipality mayoral elections of 2014, the government will continue with its reform measures,” Merrill Lynch said.

During this time, exports and fixed capital investment will be on the rise, resulting in stronger economic growth. Consumption, on the other hand, is expected to stay flat, the firm said.

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