Taiwan’s capital market outlook for new year mixed: PwC

Taipei, The local capital market this year is expected to benefit from government policy encouraging the development of smart manufacturing, while unfavorable external factors such as a slower global economy are forecast to weigh on the market, PricewaterhouseCoopers in Taiwan said Wednesday.

At a news conference that reviewed Taiwan's capital market and discussed the current outlook, Eileen Liang head of PwC Taiwan's assurance services operations, said due to the government's initiative to develop smart manufacturing, the local main board and over-the-counter (OTC) market saw eight electronics/electrical firms and six semiconductor firms launch initial public offerings last year.

The number of new listings showed the government's industrial policy was paying off, a positive sign to the local capital market, Liang said.

In addition, government support for the biotech industry also saw eight IPOs from that industry on the local equity market, Liang added.

After President Tsai Ing-wen took office in May 2016, the government unveiled its "5 plus 2" industries initiatives to transform Taiwan's economic and industrial structure.

The program covers Asian Silicon Valley development, biotech related projects, green energy, smart machinery, defense industries, new agriculture and the circular economy.

According to PwC, on the back of government efforts to encourage foreign-incorporated firms to launch primary listings in Taiwan, a total of eight foreign firms, six based in China and two from Southeast Asia, listed their shares on the local equity market last year.

Liang said the government has relaxed stock market listing rules to allow large-sized firms which remain in the red to launch IPOs in Taiwan, streamlined the IPO application review process and permitted e-commerce operators to raise funds on the OTC market, measures that are expected to pave the way for more listings in Taiwan.

However, PwC Taiwan also reminded the public of uncertainties relating to the local capital market.

In 2018, the benchmark weighted index on the Taiwan Stock Exchange, the local main board, fell 915 points, or 8.6 percent, a reflection of the trade disputes between Washington and Beijing as well as the rate hike cycle of the U.S. Federal Reserve.

Liang said the local capital market is likely to continue to feel the impact of trade friction between the United States and China, which has slowed the pace of the global economic growth.

In October, the International Monetary Fund (IMF) said global economic growth could hit 3.7 percent in both 2018 and 2019, a downgrade of 0.2 percentage points from its earlier estimate, with the IMF citing the trade disputes as part of the reason for the downward revision.

Moreover, China's Purchasing Managers' Index (PMI) fell to 49.4 in December, its first contraction in more than two years and also a reflection of trade tensions with the U.S., which has raised further concerns over global economic growth.

The uncertainty has interrupted the investment strategies of Taiwanese firms operating overseas and led them to delay plans to launch listings on the local equity market, Liang said.

The government should continue its efforts to improve the investment environment by coming up with a plan to diversify market listings and build up ties with other capital markets, in a bid to boost Taiwan's competitive edge, she added

Source: Focus Taiwan News Channel