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Templeton asset manager lauds Taiwan tech stocks

Templeton Asset Management Ltd’s Mark Mobius said Taiwanese stocks are inexpensive and he’s been buying them on expectation that Taiwan will benefit from closer ties with China.

“We have Taiwan assets and we are buying Taiwan assets,” Mobius, 71, said at a fund management conference in Hong Kong yesterday. “There is a lot of positive attitude towards China. I was in Kaohsiung recently where people there say we’re going to get the Chinese visitors.”

Mobius, who oversees US$47 billion in emerging-market equities, said he favors Taiwan’s electronics stocks, without specifying which ones.

His US$365 million Templeton Emerging Markets Fund has gained 13 percent in the 12 months through yesterday, compared with a 19 percent advance by the MSCI Emerging Markets Index.

The TAIEX Index was the world’s third-worst performing stock benchmark during President Chen Shui-bian’s (陳水扁) eight-year rule through the end of last year, Bloomberg showed. Chen, due to be replaced by the main opposition party’s Ma Ying-jeou (馬英九) next month, has called for independence from China. Ma was elected on March 22 and takes office on May 20.

This year, the TAIEX has gained 6.6 percent, Asia’s second-best performer after Pakistan’s stock benchmark, as investors bet the new president will boost ties with China and focus on expanding Taiwan’s economy.

The MSCI Asia Pacific Index has dropped 8.6 percent in that period.

The TAIEX is valued at 13.9 times estimated earnings, less than the MSCI benchmark’s 14.1 times. The local benchmark closed 141.26 points or 1.58 percent higher yesterday at 9,066.04, the best closing level since 9,300.22 on Nov. 7 last year. Turnover was NT$210.29 billion (US$6.94 billion).

Risers led decliners 1,491 to 783, with 288 stocks unchanged. A total of 67 stocks closed limit-up, while 15 were limit-down, the Taiwan Stock Exchange’s data showed.

Jim Rogers, the author of A Bull in China: Investing Profitably in the World’s Greatest Market, said on March 19 he is investing in Taiwan’s exchange-traded funds in expectation a new president there will bring peace with China.

Taiwan Semiconductor Manufacturing Co (台積電), the world’s largest custom-chip maker, has climbed 3.3 percent this month to NT$65.2 on Wednesday, while Hon Hai Precision Industry Co (鴻海精密) has gained 6 percent to NT$184.5. The stocks are the TAIEX’s biggest constituents.

Mobius also said investors should “start looking” at US equities. The Standard & Poor’s 500 Index has lost 9.1 percent this year. The Dow Jones Industrial Average has fallen 6.8 percent.

“If you look at the global US stocks and European stocks, companies that are invested globally and selling globally, they should do fairly well,” Mobius said.
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