Mixed views on shopping-voucher effects

Of them, both JP Morgan Securities and Deutsche Securities optimistically predicted the spending-stimulus program, valued at NT$82.9 billion, to work better than expected by the government, but Macquarie Securities foresaw only limited effects.

JP Morgan Securities executives said as Taiwan’s domestic demand is very likely to weaken further next year, the across-the-board issuance of consuming vouchers will do a good job in stimulating domestic demand.

The executives said the program will help raise Taiwan’s gross domestic product (GDP) growth by 0.8 of a percentage point, higher than 0.64 of a percentage point forecast by the government.

They said that facing various unfavorable economic indicators, it’s very imperative for the government to enforce critical economy-stimulus programs such as the NT$82.9 billion spending-stimulating plan.

Meanwhile, executives with the Deutsche Securities noted that if the marginal utility of the shopping coupons can be 60 percent realized, then the economic growth is expected to further advance 0.4 of a percentage point, in addition to the government-expected contribution of 0.64 of a percentage point to the island’s gross domestic product (GDP) growth.

By contrast, a manager of the HSBC Trinity Balanced Fund noted that it’s inappropriate for people to expect too much effect of the NT$82.9 billion shopping-voucher program, because the program isn’t a panacea at all for reviving economic recession. The manager said it would be a more rational practice to regard the program as a short-term boon to the local bourse and economic development, adding that strong market demand is the real key to the economic turnaround.

Macquarie Securities Group also asked stock investors not to be overly optimistic about the effects of the NT$82.9 billion consuming-voucher program, saying that the effects would be limited if tax rebate or reduction programs fail to be incorporated into the economy-stimulus packages.

Nevertheless, Macquarie Securities officials would that as households in Taiwan usually spend most on foodstuffs and beverages, and therefore such three listed firms as Uni-President Chain Stores, Ruentex Trans-Nation Group, and Far Eastern Department Store, which own Taiwan’s top three hypermarts, will benefit significantly.

The officials advised that investors can move to purchase these three issues at lows, as chances are great for the share prices of the three stocks to rally.

In fact, the prices of shares involving foodstuffs, department stores, KTV houses and 3C channels yesterday rallied across the board immediately after the market opening, in response to the encouraging issuance of NT$82.9 billion worth of consuming coupons, the officials continued.

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