Taiwan index rallies post presidential election result
The Democratic Progressive Party’s victory last Saturday has helped to boost Taiwan’s weighted index back near to its peak.
The Taiwan Capitalization Weight Stock Index (Taiex) is back trading near its peak, following the Democratic Progressive Party’s win at the latest presidential election.
On the back of the pro-independence party’s win on Saturday (11 January) with 57.1% of votes for the incumbent President Tsai Ing-Wen, the Taiex has opened Monday’s market at 12,069.61 – 0.37% above the previous week’s close.
This was proceeded by some sideways trading, before the index climbed 0.11% at 9.35am to hit 12,083.26, just slightly below a 52-week apex of 12,122.45 achieved on 18 December 2019.
How long will this momentum last?
Two local analysts expect the index to continue posting gains in the next month.
According to Li Fang-kuo, chairman of President Capital Management, Taiwan’s financial markets ‘tend to rise after an election, as uncertainty is removed’.
Based on the last six presidential elections, the Taiex climbed by an average of 7.4% in the first 30 days after results day.
Upcoming global tailwinds, including the trade deal signing taking place this week between US and China, would mean ‘the bullish trend will continue for Taiwan’s market’ said Shelly Lee, chairman of Mega International Investment Services Co.
She added that in the immediate term, fund managers and investors will likely pay attention to beneficiary stocks in the manufacturing and technology sectors.
On the flipside, experts say a pro-independence victory would lead to a drop in tourism numbers and stocks. Since Tsai took office in 2016, Chinese arrivals – which account for the majority of foreign visitors – has dipped roughly 40%.
Taiex could hit record levels by April
Li predicts that the index will hit record prices by April this year, with foreign and domestic capital inflow expected to continue.
Although the US-China trade war had rendered most global markets unstable in the last 12 months, an estimated US$12 billion of net inflows through the first 11 months of the year had kept the Taiwan stock market buoyant.
The benchmark has been rising steadily since August 2019, gaining over 16% during this time.
A strong outlook for the local technology sector, in particular semiconductors, is also expected to trigger further growth for the overall stock market, said Vincent Tsui, senior Asia analyst at Gavekal Research.
The deployment of 5G technology and a growing trend of Chinese technology companies engaging non-US chip suppliers should also lead to higher earnings in the next 12 months, said KGI Securities.
The three largest Taiwan semiconductor companies reported a 19% increase in combine revenue in the third quarter last year, Gavekal Research data showed.
Taiwan Semiconductor Manufacturing Co, which constitutes almost a quarter weightage of the Taiex, also reported a 9.7% sales growth last November year-on-year.
This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
Practice trading with $20,000 virtual funds
What is a demo trading account?
A demo account is a simulated market environment offered by a trading provider that aims to recreate the experience of ‘real’ trading as closely as possible. This is so that you can get a feel for how different products and financial markets work without the risk of losing any money, so you can explore and experiment with confidence.
When you open a demo account with IG, you’ll be given immediate access to a version of our online platform, along with a pre-set balance of $20,000 in virtual funds to practise with.
Important points
While much of the functionality of the live platform features in the demo, there are key differences to be aware of, including (but not limited to):
- Trades made through the demo account will not be subject to slippage, interest and dividend adjustments, or out-of-hours price movements
- Trades may be rejected if you have insufficient funds to open them, but, unlike on a live account, will never be rejected on the grounds of size or price
- You will not be charged for chart packages on a demo account
- Trades will not be closed if you have insufficient funds to cover margin and running losses, which can happen on a live account
This is by no means an exhaustive list, and therefore opening a live account we recommend you read the information available on our website as well as the Customer Agreement to ensure that you are aware of the features of a live account.
Discover the differences between a live account and a demo account
Why use a trading simulator?
Traders will choose to use a trading simulator, such as a demo account, because it enables them to get to grips with a platform, build their strategy and grow in confidence, without having to risk any real money.
Trading simulators aren’t just for newcomers. Experienced traders often like to use demo accounts to try out new strategies, tools or ideas, safe in the knowledge that they won’t result in any real-world losses.
You’ll often see demo accounts described as ‘paper trading’, which is the term to describe simulated securities trading. However, with an IG demo trading account, you’ll gain access to over 17,000 markets, including:
As well as a range of other markets including bonds, rates and options.
FAQs
What can you do on a demo trading account?
A demo account will enable you to view the range of financial markets available to you with IG and get used to how they behave. You’ll be able to select the markets you want to keep an eye on and set alerts so you can react instantly to any price volatility. The demo account will also help you navigate the IG platform, ensuring that you can read and analyse price charts, fill in the deal ticket and monitor open positions.
Alternatively, if you’re interested in using more advanced software, we also offer an MT4 demo account. This enables you to build your understanding of the MetaTrader4 online trading platform in a risk-free environment.
Can I practice CFD trading?
With an IG demo account, you can practice CFD trading. These products use leverage, which enables you to gain full market exposure for just a small initial deposit. While this can magnify your returns, it can also magnify your risk – making it important to get to grips with how they work before you start to trade on live markets.
What is the difference between a demo trading account, trading simulator and paper trading account?
There is no difference between a demo trading account, trading simulator or paper trading account. All of these terms are just synonyms for the same type of simulated trading platform.
For your country of residence, you may wish to use {{country}}.
Sorry we cannot open an account for clients with your country of residence through this site. Instead, please visit {{country}}.
Live prices on most popular markets
- Forex
- Shares
- Indices
