US tapering could hit stock market hard, FSC says

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KEY PLAYERS:
Local business profits, rather than a change in US policy, would be the deciding factor affecting local revenue, FSC said

  • By Kao Shih-ching / Journalist

Average daily turnover in the local stock market could drop 40% to less than NT $ 300 billion ($ 10.8 billion) next year as the United States looks set to reverse monetary policy , said the Financial Oversight Commission (FSC) at a meeting of the Legislative Assembly’s finance committee. yesterday.

The commission said revenue could drop to NT $ 287 billion next year, from an estimated NT $ 478.2 billion this year.

The commission provided the figure as a reference for lawmakers when they consider proposed changes to the Securities Transaction Tax Act (證券 交易 稅 條例), which aims to extend the day trading tax cut until the end of 2024. .

Photo: ANC

“It is difficult to project the rotation of the local stock market, as it can be affected by many factors, such as local and foreign policies, movements of foreign funds and the macroeconomic environment,” said the chief secretary of the Securities and Futures Bureau, Kao Ching-ping (高 晶 萍). Taipei Times by phone.

“So we tried to focus on a bigger factor, the US monetary policy, and analyzed its effects on the Taiwan market,” Kao said.

The average daily market revenue was NT $ 155.6 billion in 2019 and increased by around 60% to NT $ 252.4 billion last year, when the United States relaxed its monetary policy, Kao said.

While the US Federal Reserve is expected to ease monetary policy by the end of this year or early next year by cutting asset purchases or even increasing borrowing rates, the commission predicted that the Stock market turnover would decrease by 40% next year compared to this year. , she said.

“However, this is a rough guess, as there were other factors responsible for the growth in revenue from 2019 to last year as well. would not plunge 40% unless an extreme scenario materializes – for example, the US Fed ending its asset purchase quickly and immediately, ”Kao said.

When asked if he agrees with the expected drop in turnover, FSC Chairman Thomas Huang (黃天牧) said it was only a prediction and that In addition to US monetary policy, there are many other factors that could affect revenue, such as inflation and COVID-19. situation.

If the United States ends quantitative easing, it will certainly affect the movement of global funds, including foreign funds in the Taiwan stock market, but the profits of local companies would be the key factor that would decide the turnover. business, he told lawmakers.

He added that local equity fundamentals should remain strong next year.

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