Merrill Lynch yesterday included Taiwan's camera lens maker Largan Precision Co (大立光) and chipmaker United Microelectronics Corp (UMC, 聯電) among its seven favorite Asian electronics stocks, which were chosen for strong growth prospects in a foreseeable upswing.
Their valuations were attractive after a drastic 13 percent decline in stock prices on sagging sentiment amid fears of weak growth, inflation and other factors, Hong Kong-based Merrill Lynch analyst Sieh Tien-yu (
In the wake of the dramatic, but "healthy" pullback, "We believe that we are close to a bottom in the [tech] sector," Sieh said, adding that the recovery may not be quick and near-term upside may be limited.
Sieh said a high base of comparison with the second half of last year and the first half of this year would blunt the tech growth rate in the second half of this year.
On top of that, a weaker greenback on speculation of further rate hikes by the US Federal Reserve would weigh on revenues and earnings of tech firms, he added.
Sieh said he did not see major changes in the operating outlook for Asian tech stocks after the correction.
Handsets would remain relatively stronger and computers and consumer electronics-related would be relatively weaker, he said.
Despite the cautious prospects for the tech sector over the next six months, Sieh said some stocks with growth potential were almost at a point where they were cheap enough to buy.
Taiwanese electronics maker Lite-On Technology Corp (光寶科技), the nation's top electronics component maker Hon Hai Precision Industry Co (鴻海精密) and Phoenix Precision Technology Corp (全懋), were also among Sieh's top picks.
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