By John Liu, The China Post
TAIPEI, Taiwan — The benchmark Taiwan Capitalization Weighted Stock Index (TAIEX) exceeded 8,600 points yesterday, reaching a record high for the past 28 months. At the end of the trading day, the TAIEX closed 88.39 points higher at 8,623.43 on turnover of NT$87.64 billion. Institutional investors overbought by NT$9.49 billion, of which foreign investors overbought by NT$7.95 billion, investment securities trust companies overbought NT$206 million, and brokerage dealers overbought by NT$1.34 billion. The stock market has performed well this year, going up 12 percent so far. The Nikkei 225 surged 55.64 percent so far, while Dow Jones climbed 25.75 percent. Government Officials’ Optimism William Tseng (曾銘宗), chairman of the Financial Supervisory Commission (FSC, 金管會) said yesterday that he is confident about the stock market’s future performance, and expects the growth momentum to continue. Finance Minister Chang Sheng-ford (張盛和) also said yesterday that he is optimistic that the stock market will reach 8,600 points tomorrow.
Both of the finance officers said that the return on investment (ROI) in the real estate market has reached a stagnant point, and that the capital in the realty market will start to flow into the stock market next year, boosting its growth. The two officers provided their opinions while answering Democratic Progressive Party lawmaker Hsueh Ling’s (薛凌) questions in the Legislature yesterday. According to Chang, the ROI in the real estate market has reached a plateau. Chang said that capital tends to move in the direction where ROI is higher, and while one market turns “rich,” the other market turns “poor.” Now that the real estate market has undergone a period of growth, its capital is expected to move into the stock market. With more capital inflow, both trading prices and volumes are expected to increase, bringing momentum to the stock market, Chang added. Signs of Better Economy in 2014 Tseng concurred and said that the stock market will be stabilized gradually next year, and that major investors are expected to participate in more trading in the market. Tseng said that the real estate market has performed well for almost a decade and expects part of the capital in the market to flow into the stock market. Tseng expressed his confidence in the stock market and pointed out four reasons to be optimistic.
First, business fundamentals are sound and profits have grown 59 percent for three quarters, compared with the same period last year. Second, much capital in the market is expected to move from the real estate market into the stock market. Third, fundamentals of the economy are also sound. Next year’s economic growth rate is forecast to outperform that of this year, and to grow between 2.59 and 3.8 percent. Fourth, record high figures have been reported in stock markets around the world, indicating strong fundamentals in the global economy.