UBS, a leading global financial services company, said yesterday it remained upbeat about the Taiwanese investment market’s prospects in the second half of the year, when the positive impact from improvement in cross-strait relations should emerge despite the global economic slowdown.
In particular, analysts from the world’s largest manager of private wealth expressed confidence in the long-term growth of notebook computers as well as the banking sector.
William Dong (董成康), head of UBS Taiwan’s equities and research, said better cross-strait ties and a stable political environment would make the country a more attractive market in the years to come.
Local market valuation remains attractive with a forecast price-to-earnings ratio of 11.6 times next year, Dong told a media briefing yesterday.
“Further, we estimate that cash dividend by TAIEX-listed companies will reach a peak payment period between July and August, providing a boost to market liquidity,” Dong said.
The TAIEX yesterday dived 138.37 points, or 1.8 percent, to 7,738.12 at the close of trade. The stock index has shed more than 1,300 points since President Ma Ying-jeou (馬英九) of the Chinese Nationalist Party (KMT) took office on May 20.
Dong said that short-term uncertainties persist because of the global economic slowdown. But he predicted that Taiwan could emerge from the challenge unscathed if new measures on direct charter flights and stronger cross-strait tourism were implemented smoothly.
Arthur Hsieh (謝宗文), UBS’ leading electronics hardware analyst, echoed the sentiment, saying that a seasonal recovery in the sector was already under way.
Hsieh said that demand for notebooks had evolved from households to individuals as they helped increase the productivity of their users and notebook prices had been stable in contrast to rising commodity prices.
“We’re confident about the long-term growth prospects of conventional notebook PCs and new opportunities in the low-cost notebook PC [market],” he said.
“Supply chain companies in Taiwan could further cement their leading position in the industry with the successful introduction of low-cost notebook PCs,” Hsieh said.
Hsieh said he was not as optimistic about the outlook for the handset supply chain, as the sector has transformed from industrial designs to service based industry models and the market is near saturation.
Pandora Lee (李懿琁), a UBS financial and insurance research analyst, said she held a positive of the banking industry, which is poised to enjoy a multi-year earnings recovery through higher loan growth, greater fee income and lower credit costs.
“Overall, the industry will reap benefits from cross-strait charter flights and the upcoming influx of Chinese tourists,” Lee said.
Lee said she was cautious about the insurance sector, however, citing the gap between current property values and high expectations of property appreciation, as well as low cumulative write-off ratio on collateralized debt obligations and foreign exchange risks.
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