TAIPEI (CNA) — A Japanese brokerage said Monday that the benchmark weighted index on the Taiwan Stock Exchange, or the Taiex, is expected to hit 12,830 points this year as President Tsai Ing-wen (蔡英文) won her second term Saturday.
If the Japanese brokerage’s prediction is accurate, the Taiex will top a record intraday high of 12,682 points seen on Feb. 12, 1990.
Tsai of the Democratic Progress Party (DPP), who obtained a new mandate to lead the country by winning her biggest rival Han Kuo-yu (韓國瑜) of the opposition Kuomintang (KMT) by a comfortable margin of 57.13 percent to 38.61 percent.
In addition, the DPP grasped 61 seats of the 113 seat Legislative Yuan also in the Saturday election to maintain its majority, so the latest political landscape is expected to help the Tsai administration push forward its economic policy and an industrial restructure smoothly, the brokerage said.
Saturday’s win for the DPP was a sharp contrast to a crushing defeat it suffered in the local elections 13 months ago, when the ruling party only won mayors and county magistrate seats in six cities and counties, far fewer than the 15 grasped by the KMT, the brokerage added.
On Monday, a day after the elections, the Taiex closed up 0.74 percent at the day’s high of 12,113.42 points with some stocks related to the Tsai government’s “5 plus 2” industrial development program boosted by strong buying.
The “5 plus 2” initiative is aimed at transforming Taiwan into an Asian Silicon Valley, developing the biotechnology, green energy, smart machinery, and defense industries, and promoting new agriculture and the circular economy.
Among the stocks under this particular program, Century Iron and Steel Industrial Co. and Hsin Kuang Steel Co., both of which are keen to invest in offshore wind power development, were up 3.42 percent and 2.39 percent, respectively.
The Japanese brokerage said the Tsai government is expected to continue its efforts to encourage Taiwanese investors operating overseas to return to Taiwan to invest, a move which could boost domestic demand further.
The Japanese brokerage said while the global economy remained dictated by trade tensions between the United States and China, Tsai’s efforts to push for Taiwan’s industrial restructuring are expected to lead the economy to move ahead to become one of the best performers in Asia.
The brokerage cited past statistics as saying that in four of the past five presidential elections in Taiwan, the Taiex rose between 2.6 percent and 10.2 percent in one month after voting.
The securities house said on the back of assumption that the Tsai administration will smoothly execute its economic policy working with her party’s majority in the Legislative Yuan, enterprises in Taiwan are expected to see their bottom lines improving, which could attract more buying in the equity market.
Moreover, the brokerage said the local equity market is expected to benefit from its relatively high dividend yields which are estimated at an average of about 3.8 percent in 2020 to attract more buying.
The securities house added Taiwan’s high tech sector is expected to ride the waves of the 5G technology development to post higher earnings and make many electronics manufacturers more attractive to equity investors.