Thu, Apr 18, 2013 - Page 14 News List

Negative global events to hit TAIEX in Q2: analysts

By Kevin Chen  /  Staff reporter

The main bourse has seen a correction of nearly 5 percent since hitting this year’s high of 8,089 points last month, amid a slew of negative events worldwide.

The TAIEX ended 8.02 points, or 0.10 percent, higher yesterday at 7,809.07. So far this year, the index has increased 1.42 percent, Taiwan Stock Exchange data showed.

Equity strategists are advising investors to look for high-yield stocks this quarter, while avoiding PC-related shares.

In its latest market strategy report, Credit Suisse analyst Jeremy Chen (陳建名) said the brokerage maintained its 8,400-point target for the TAIEX this year, but warned about headwinds like slow growth in China, avian influenza outbreak fears and tensions on the Korean Peninsula rising in the near future.

“This has prompted us to modify our model portfolio with a bias on high-dividend yield plays and defensive stocks amid macro uncertainties,” Chen said in a note to clients yesterday.

Credit Suisse said it had shifted more focus to upstream technology firms such as metal casings maker Catcher Technology Co (可成科技) and power supply unit maker Delta Electronics Inc (台達電), as well as selective financial shares like Chinatrust Financial Holding Co (中信金控), from the downstream PC hardware sector due to its poor outlook for the PC market.

Fubon Securities Investment Services Co (富邦投顧) analyst Kevin Chang (張宜立) agreed, saying his firm also preferred high-yield shares because of the bumpy second quarter that it is expecting.

Fubon also said it would continue to avoid Apple Inc plays such as Hon Hai Group (鴻海集團) affiliates, as well as Windows 8-associated tech shares. It also gave an “underweight” rating to basic materials shares on the back of uncertainties about China’s growth outlook this quarter, Chang said in a separate note.

“Due to external headwinds, we expect policymakers will likely institute more market-friendly policies (related to cross-strait collaboration and reforms in Taiwan’s financial sector) and economic stimulus measures to ensure moderate economic growth in 2013,” he said.

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