After a tumultuous year, UBS Securities Pte Ltd (瑞銀證券) yesterday said that the TAIEX may stabilize at current levels this year although the nation’s economic fundamentals would continue to dip in the first half.
However there is no upside momentum in sight, William Dong (董成康), managing director and head of the firm’s Taiwan equities, said at a media briefing yesterday.
“Psychologically, the worst is over for [TAIEX] investors, who no longer overreact to bad news,” Dong said.
Such a market rebound signifying an economic recovery, however, may only be realized sometime next year as global demand is likely to continue to decline before the local economy hits bottom, he said.
Dong refused to define what he called “the current levels,” but said the local bourse had entered levels of correction, which would continue into the second half of this year.
The TAIEX yesterday closed up by 0.62 percent to 4,727.26 points. Three major institutional investors bought a net NT$6.44 billion (US$195 million) in local stocks yesterday, including NT$4.88 billion by foreign fund managers, the Taiwan Stock Exchange’s tallies showed.
Yesterday’s rise on the local bourse was led by traditional commodity sectors such as steel and petrochemical companies as well as textile firms.
Dong said UBS Securities continued to favor electronics stocks, such as semiconductor and panel industries, which have plummeted in the past few months and are expected to hit bottom and rebound faster than other stocks.
Arthur Hsieh (謝宗文), the firm’s stock analyst tracking tech and electronics shares, yesterday forecast a pickup in seasonal demand in the third quarter of this year after most of the nation’s manufacturers, such as panel makers, overly cut production.
Hsieh added that he expects the sectors to continue consolidation while beefing up price competition to weather the current slump.
Referring to US retailer Wal-Mart Stores Inc’s trend-bucking sales, Hsieh said that “pricing will be an important factor determining the survival of local companies.”
Though he expected global demand for PCs and handsets to be delayed, Hsieh said that he continued to assign “buy” ratings on Acer Inc and HTC Corp (宏達電) among downstream industries.
In the wealth management business, Christine Ong (翁思婷), regional market manager of Taiwan at UBS AG, also said that she expected to see slower growth this year after a catastrophic year last year.
But now is a good time to rebuild clients’ portfolios while educating them about investment diversification to minimize risk, she said.
After opening branches in April in Taichung and Kaohsiung, Ong said that UBS is committed to the domestic wealth management market, its third-largest market among Asian countries, where the firm has 180 billion Swiss francs (US$165.6 billion) in total assets under management.
Separately, UBS expects consolidation among Taiwanese banks this year as the lenders seek to become more competitive, Bloomberg reported, citing Jerry Guo (郭嘉宏), head of investment banking at UBS Securities in Taipei.
“Mergers and acquisitions will be our main focus this year,” Guo told Bloomberg yesterday.
He declined to say what transactions UBS may be working on or to disclose how much the bank earned from its Taiwan operations last year.