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May 27, 2017

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Despite ongoing protests, no market crash forecast: securities consultants

TAIPEI, Taiwan -- In light of President Ma Ying-jeou's address yesterday in response to the student protests, securities consultants remarked that the TAIEX is expected to hold its upward momentum.

According to securities consultants, the contents of the president's address, delivered with a more amicable tone toward his detractors, is in line with expectations of the market, and the TAIEX is likely to maintain its momentum amid rising social discord.

Securities consultants, however, stated that persisting setbacks to the Cross-Strait Trade in Services Agreement will hamper the index's climb to new heights in the long run.

According to foreign institutional investors, the impact of the student protests is expected to have limited effect on the market. Amid the student protests, foreign institutional investors on Friday bought NT$10 billion worth of stocks in the Taiwan market, in sharp contrast to domestic institutional investors, who had exhibited a more tentative stance. Market observers said that if domestic institutional investors continue to remain hesitant toward buying, the TAIEX's momentum in the second quarter of this year may be weakened.

Hantec (亨達投顧) stated that as the trade pact affects only the service industries, and that its legislative approval will not yield immediate results, setbacks will not affect the market markedly in the short term. In addition, with foreign institutional investors exuberantly buying NT$10 billion worth of stocks last Friday, it remains possible for the TAIEX to continue its upward march toward the 9,000-point benchmark. The company, however, warned that current setbacks may hamper the progress of the follow-up trade in goods agreement with mainland China, spelling gloom among Taiwan's export-oriented industries, including display panels, automobiles and petrochemical, who are concerned that competition will be exacerbated without the promised lifting of tariffs. The company stated that as the export of trade goods accounts for 24 percent of Taiwan's economy, the impacts of stumbles in trade agreement negotiations may be limited, but remain a long-term concern in the nation's role among international competitors.

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