Investors should trim their holdings in Taiwan as local stocks have outpaced the economy and are relatively expensive compared with other Asian shares, UBS said yesterday.
The global investment bank said it was maintaining its forecast of a 4.5 percent contraction for the Taiwanese economy this year amid falling external demand and sluggish domestic consumption.
Kevin Hsiao (蕭正義), head of UBS Wealth Management Research Taiwan, said he was cautious about the short-term outlook of the local equity market but was upbeat about its long-term prospect.
“Investors should adjust their portfolio and cut down holdings in local shares that have rallied” ahead of an economic recovery, Hsiao told a media briefing.
Hsiao advised caution before the “world economy displays stronger signs of an improvement.”
The estimated price to earnings ratio for Taiwanese-listed firms has reached 40.2x — far higher than Hong Kong’s 18.2x, South Korea’s 14.7x and Singapore’s 15.5x.
Estimated price to earnings ratios for China and India — whose economies are predicted to post growth this year thanks to domestic demand — are also lower at 14.3x and 16.6x respectively, UBS data showed.
Pu Yong-hao (浦永灝), head of UBS Asian Research, said he was not surprised at the ongoing market corrections across Asia following the strong rebound in the first half of the year.
Pu advised investors to take profit and prospective entrants to stay on the sidelines.
“I recommend the strategy not because the global economy will suffer another decline but because it will not get significantly better anytime soon,” Pu said in a statement.
Both analysts expect Taiwan to benefit from warming cross-strait ties, which they said could spur a GDP growth of 2 percent next year.
While China’s stimulus package helps, true recovery hinges on a revival of demand in the US and Europe, Hsiao said.
Hsiao forecast that the local currency would trade at its current level against the greenback for the rest of the year.
Pu said slumping exports and market adjustments would also limit changes in the value of most Asian currencies.
GROWING CONCERN: Some senior Trump administration officials opposed the UAE expansion over fears that another TSMC project could jeopardize its US investment Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is evaluating building an advanced production facility in the United Arab Emirates (UAE) and has discussed the possibility with officials in US President Donald Trump’s administration, people familiar with the matter said, in a potentially major bet on the Middle East that would only come to fruition with Washington’s approval. The company has had multiple meetings in the past few months with US Special Envoy to the Middle East Steve Witkoff and officials from MGX, an influential investment vehicle overseen by the UAE president’s brother, the people said. The conversations are a continuation of talks that
Nintendo Co hopes to match the runaway success of the Switch when its leveled-up new console hits shelves on Thursday, with strong early sales expected despite the gadget’s high price. Featuring a bigger screen and more processing power, the Switch 2 is an upgrade to its predecessor, which has sold 152 million units since launching in 2017 — making it the third-best-selling video game console of all time. However, despite buzz among fans and robust demand for pre-orders, headwinds for Nintendo include uncertainty over US trade tariffs and whether enough people are willing to shell out. The Switch 2 “is priced relatively high”
Alchip Technologies Ltd (世芯), an application-specific integrated circuit (ASIC) designer specializing in artificial-intelligence (AI) chips, yesterday said that small-volume production of 3-nanometer (nm) chips for a key customer is on track to start by the end of this year, dismissing speculation about delays in producing advanced chips. As Alchip is transitioning from 7-nanometer and 5-nanometer process technology to 3 nanometers, investors and shareholders have been closely monitoring whether the company is navigating through such transition smoothly. “We are proceeding well in [building] this generation [of chips]. It appears to me that no revision will be required. We have achieved success in designing
UNCERTAINTY: Investors remain worried that trade negotiations with Washington could go poorly, given Trump’s inconsistency on tariffs in his second term, experts said The consumer confidence index this month fell for a ninth consecutive month to its lowest level in 13 months, as global trade uncertainties and tariff risks cloud Taiwan’s economic outlook, a survey released yesterday by National Central University found. The biggest decline came from the timing for stock investments, which plunged 11.82 points to 26.82, underscoring bleak investor confidence, it said. “Although the TAIEX reclaimed the 21,000-point mark after the US and China agreed to bury the hatchet for 90 days, investors remain worried that the situation would turn sour later,” said Dachrahn Wu (吳大任), director of the university’s Research Center for
RSS