Taiwan’s benchmark index, which has experienced a market correction following the Lunar New Year holidays last month, may bounce back in the second half as concerns over Japan’s nuclear crisis subsides, equity analysts said yesterday.
The market will hit bottom next quarter, as the TAIEX has shed about 1,000 points in the last month and a half, while major economic indicators at home and abroad continue to suggest positive cyclical movements ahead, said Jordan Chen (陳朝燈), chief investment officer at Schroder Investment Management Taiwan Ltd.
“I’m more optimistic now than before about local equities,” Chen told a media briefing. “The ongoing nuclear crisis [in Japan] may put a quicker end to the correction.”
Japan supplies 17.1 percent of components for the world’s consumer electronics, 21.3 percent for semiconductors and 35.7 percent of NAND flash chips, Chen said, citing global research data.
“Worries about supply constraint may ease as plants there resume production,” he said.
The analyst expects petrochemical and China-related stocks to lead the rebound as the former are poised to benefit from production disruptions in Japan, while China’s growing domestic demand may strengthen the latter’s bottom line.
Schroder vice president Tony Chen (陳同力) expects global funds to return to Asia and other emerging markets next quarter to capitalize on their fast-growing economies.
Tony Chen said fund flows to advanced countries were showing signs of slowing down toward the end of this quarter.
“Markets with higher GDP growth promise higher yields,” he said. “The emerging economies are expected to contribute 60 percent of global GDP growth this year.”
The two analysts expect oil prices to take a break next quarter as the warming weather will weaken demand slightly, but may accelerate again in the second half, deepening inflationary pressures.
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