In the year of the tiger, the value of Taiwan’s stock market has evaporated by more than NT$8 trillion. The policy of the US Federal Reserve will be the key variable for the market in the year of the rabbit

(Central News Agency) The Year of the Tiger closed at 14932.93 points, and the market value evaporated NT$8.04 trillion. Looking forward to the Year of the Rabbit, the legal person said that there are relatively many international variables during the Lunar New Year holiday, and the fundamental figures will affect the endurance of the Spring Festival background stocks. Heavyweight earnings reports, economic indicators, US debt ceiling issues and global central bank decisions.

Taiwan stocks closed at 14932.93 points in the year of the tiger, and fell 2741.47 points, or 15.51%, in the year of the tiger.

In the Year of the Tiger, only the three major legal entities actively covered over RMB 273.936 billion in buying, self-employed traders reduced their stake by RMB 216.114 billion, and foreign capital sold more than RMB 1.07 trillion. The three major legal entities withdrew a total of RMB 1.01 trillion from Taiwan stocks Yuan.

Inventory of important international investment information during the Spring Festival closure period, including the release of financial reports of several heavyweight companies in the US stock market, the initial value of GDP in the fourth quarter of 2022, the US Personal Consumption Expenditures Price Index (PCE), durable goods orders in December and other economic data, global central banks Decision-making, the U.S. debt ceiling issue, etc.

SinoPac Securities stated that January is the earnings month for U.S. stock companies. In mid-January, after financial stocks such as Citigroup, Bank of America, and JPMorgan Chase took the lead, Baoqiao (PG), Netflix (NFLX), and Jiao (JNJ), Texas Instruments (TXN), Abbott Laboratories (ABT), Boeing (BA), ASML (ASML), Tesla (TSLA), Intel (INTC), American Express (AXP) and other heavyweights Companies are releasing their financial reports one after another. The profit performance of these global leading companies will provide insight into the dynamics of the upstream and downstream supply chains and have an impact on the Taiwan and US stock markets.

Jian Boyi, assistant manager of Cathay Pacific Securities Consulting Office, said that the Lunar New Year holiday is relatively long this time, and there are relatively many international variables. US$1 trillion (about NT$948 trillion) statutory debt ceiling, if Congress does not take action, the United States will have the problem of being unable to pay its debts in June, and subsequent financial reports and national debt will affect the performance of US stocks. There will be an impact.

In addition, Taiwan’s economic data at the end of January, such as export orders and economic countermeasures, are not expected to be very good. Fundamental figures will affect the endurance of Chinese New Year background stocks.

Sun Chuanshu, manager of PGIM Prudential’s high-growth fund, analyzed that with the slowdown in interest rate hike expectations, the U.S. dollar index has turned weak. Since 2023, the attitude of foreign capital towards Taiwan stocks has changed, and they are clearly on the side of covering buyers; Oversold Taiwan stocks throughout the year, seeing that Taiwan stocks have the advantages of high yield rate and low PE ratio. Once foreign capital turns to overbuy in the Year of the Rabbit, it will be conducive to the capital injection of Taiwan stocks.

Whether the global economy will enter a recession and when the Fed’s policy will change are the focus of the market

(Central News Agency) Last year (2022) was a tough year for investors, with both U.S. and Taiwan stocks seeing their worst performances since the 2008 financial tsunami. Sending off the Year of the Tiger and ushering in the Year of the Rabbit, it is generally expected that whether the global economy will enter a recession, when the Fed’s policy will change, and the epidemic situation in China will all be key variables that will affect the market trend in the Year of the Rabbit.

Yuanta Investment Trust stated that investors in the Year of the Rabbit still need to face the challenges of “high inflation and high interest rates”. The investment strategy still recommends giving priority to the balanced allocation of stocks and debts of large and high-quality leading companies.

Yuanta’s global investment-grade bond research team stated that under the scenario of rising benchmark interest rates and falling inflation, the Federal Reserve no longer needs to insist on the aggressive rate hikes in the past. Prioritize the deployment of investment-grade bonds of international leading companies, enjoy high-quality bond interest first, and then wait for the bottom of the economy to gradually build high-quality stock positions.

Prudential Trust pointed out that whether the global economy is entering a recession and when the Federal Reserve’s policy will change will be the focus of the market in the new year. According to the current trend and evaluation analysis, bonds may perform better than the stock market. It is expected that in the first half of the Year of the Rabbit, investment should be based on “bonds better than stocks” as the main axis of investment, and the method of regular quotas will be deployed in batches at low prices.

Ye Jiarong, director of Prudential’s market strategy team, said that after entering the Year of the Rabbit, interest rates on U.S. government bonds may still rise, but under the premise that the end of interest rate hikes is not far away, the space should be limited. In the first half of the Year of the Rabbit, we should grasp the opportunity to enter the market under the volatility of the bond market. As for stocks and other risky assets, we still have to face the challenges of economic recession and downward revision of corporate annual reports in the first quarter.

According to Ye Jiarong’s analysis, looking back at the data of the three interest rate hike cycles since 2000, as long as the Fed enters the market when the Fed finally raises interest rates, the average rate of return after one year of holding bonds is 10%. It is expected to be reflected first in the first half of 2023, and in the second half of the year, non-investment grade bonds are expected to take over the rise.

In addition, Ye Jiarong said that the factors supporting the strengthening of the U.S. dollar in the Year of the Rabbit are expected to turn, which will reduce the need for the market to hold the U.S. dollar as a safe-haven currency; relatively, it is expected to accelerate the performance of currencies in non-U.S. countries and emerging markets.

As for stock market investment, Ye Jiarong believes that the layout of the Year of the Rabbit must select investment targets. Investors may wish to give priority to the four major themes of medical care, infrastructure, and policy-supported ESG industries, as well as new supply chains such as green electricity, electric vehicles, and the cloud. , these themes not only have favorable policies, but also have the ability to resist inflation; investment areas are mainly investment opportunities in Taiwan stocks and non-US regions.