HSBC Holdings PLC lowered this year’s forecast for the TAIEX by 20 percent on concern China’s tightening policy and Europe’s debt crisis will overshadow closer ties with China.
This year’s target for the TAIEX was cut to 8,000 from 10,000, strategists led by Jacqueline Tse (謝家瑜) wrote in a report. HSBC also downgraded its recommendation on Taiwan stocks to “neutral” from “overweight.”
The TAIEX fell 15.69 points, or 0.21 percent, to 7,344.59 yesterday. The benchmark index has slumped 10 percent this year, Asia’s second-worst performing benchmark index, on deepening concern that Chinese measures to cool its property market and widening budget deficits in Europe will derail global economic growth.
The gauge rallied 78 percent last year as President Ma Ying-jeou (馬英九) helped cement closer relations with China by abandoning his predecessor’s pro-independence stance.
“Most of the cross-strait initiatives are progressing as scheduled, but these positive developments have been overshadowed by the outbreak of the European debt crisis and China’s macro policy changes to control growth [in China],” the strategists wrote.
HSBC downgraded its recommendation on Taiwan’s technology industry to “neutral” from “overweight,” saying other industries will derive more benefit from a trade agreement expected to be signed with China this month.
HSBC upgraded the steel sector to “overweight” from “neutral,” citing strong demand and benefits because of exports to China after the ECFA is signed.