Investors in pursuit of high returns are switching to commodity shares such as Formosa Plastics Corp (台塑), the nation's biggest supplier of polyvinyl chloride, as the technology sector is gradually losing its momentum, analysts said yesterday.
"It is evident that investors are moving their money to commodity shares, or stocks that have paid high cash dividends in the past several months," said Bill Lan (
This is a result of the bearish outlook for the technology sector, including the wafer foundry and liquid-crystal-display areas, for next year, Lan said.
Lan's remarks are in line with Morgan Stanley economist Andy Xie's (
"The high-growth era is over as the high-tech industry on course to mature, not to mention the stiff price competition," the Hong Kong-based Xie said at a seminar on Thursday in Taipei.
But investors' shift in interest does not mean that commodity shares, including steel and cement stocks, will overtake electronics as the most heavily traded stocks, since technology shares make up a big chunk of the nation's broader stock market, Lan said.
"Investors now tend to take a neutral stance on tech stocks, a big change from overweight," said Lan, who has Formosa Plastics and China Steel Corp (
Turnover of electronics shares rose to NT$27.86 billion, which made up a hefty 60 percent of the Taiwan Stock Exchange's total turn-over of NT$45.66 billion yesterday.
The TAIEX, which usually take its cue from overnight movement on Wall Street, inched up 0.41 percent, or 21.91 points, to 5,389.93 points, despite the Dow Jones Industrial Average's plunge to a new low this year.
Andrew Teng (鄧安瀾), an analyst with Taiwan International Securities Corp (金鼎證券), has also seen a shift in investor's interest, saying non-tech stocks are outshining electronics firms.
"Those who grabbed tech stocks at low prices only want to take a profit from a rebound," Teng said.
Realtek Semiconductor Corp (瑞昱半導體), which designs chips that control flat-panel displays used in personal computers, and Giga-Byte Technology Co (技嘉科技), the nation's leading computer mother-board maker, are some prime targets for profit-taking, said Chien Po-yi (簡伯儀), an analyst with Jih Sun Securities Investment.
In a middle-and long-term view, however, Chien is still suggesting that investors buy commodity shares, including plastics, cement and steel, which he said are expected to sustain high growth because of the booming demand from China.
Chien said the financial sector is also good investment target as possible interest hikes by the central bank will be a boon to lenders and insurance companies.
The central bank is expected to discuss whether to raise interest rates when it meets next month for its regular board of directors and supervisors conference.
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