Investors looking for tips on where Taiwanese shares will be heading next year might be puzzled by the mixed outlook for the local tech sector, based on a spate of corporate earnings conferences lately.
Still, investors could pay attention to the nation’s upstream technology sector, life insurers and selective non-tech manufacturers in the textile, contact lens and bicycle businesses, JPMorgan Securities Asia Pacific Ltd said yesterday.
In a report authored by Hong Kong-based analyst Alvin Kwock (郭彥麟), JPMorgan expects the nation’s GDP to expand 3.1 percent on recovering economies in China and the US, following growth of 1.8 percent for this year.
The TAIEX, which is in retreat from 8,439 points, has risen 6.39 percent since the beginning of the year. It closed 0.18 percent higher at 8,191.46 yesterday.
“We expect second-half trends to continue” into next year, Kwock said in the report. “The visibility for semiconductor profits is higher than for downstream [tech firms].”
Kwock said Apple Inc’s plans to diversify suppliers and the tech industry’s anticipated end to inventory adjustments by the end of the year should support semiconductor stocks, such as wafer foundry Taiwan Semiconductor Manufacturing Co (台積電) and chip packager Advanced Semiconductor Engineering Inc (日月光).
Investors should avoid downstream assemblers such as Pegatron Corp (和碩), as these firms will face significant order reshuffling and shrinking margins, he said.
JPMorgan also favors Taiwanese insurance players such as Cathay Financial Holding Co (國泰金控) because of their direct correlation with higher US bond yields.
That is because every 50 basis-point increase in US long-term bond yields is likely to lead to a rise of 25 percent in Taiwanese insurers’ embedded value, compared with a 10 percent growth in their peers in China and South Korea, the US brokerage said.
As for the selective non-tech players in the textile, contact lens and bicycle sectors, the brokerage indicated that their earnings resilience stories have not been duly appreciated by the market, saying its topics include apparel maker Makalot Industrial Co (聚陽) and precision machine component supplier Hiwin Technologies Corp (上銀).
Textile names such as Formosa Taffeta Co (福懋), Eclat Textile Co (儒鴻) and Toung Loong Textile Manufacturing Co (東隆), as well as the potential non-tech beneficiaries of the US-led Trans-Pacific Partnership (TPP) are also favored by the non-tech research team at Macquarie Capital Securities Ltd.
Macquarie analysts led by Corinne Jian (簡秋萍) said that the non-tech sectors are likely to do well next year, or at least in the first half of next year, as liquidity in Taiwan is likely to continue flowing into non-tech sectors, given the expected lack of new flows in the tech space over the next three to six months.
“We would like to reiterate our positive view on the Taiwanese non-tech space and see more upside ahead, as many interesting non-tech names are still under-researched and not well-known or well-owned,” Macquarie analysts said in a report on Nov. 8.
However, Yuanta Securities Corp (元大證券) economist Aiden Wang (王誠宏) said last week that non-tech stocks, which have shown continuous rallies in the past two quarters, could face a pullback in share prices in the near to medium term, especially for those whose third-quarter sales growth failed to keep up with their share price rallies.
Polytronics Technology Corp (聚鼎科技) yesterday announced that it is buying Henkel AG’s thermal clad dielectric material (TCLAD) business division for US$26 million as the Taiwanese firm aims to improve its technology, product portfolio and revenue performance. Polytronics, headquartered in the Hsinchu Science Park (新竹科學園區), is a supplier of protection components and heat dissipation materials. The firm entered the metallic heat-dissipation substrate market in 2007 and developed a unique solventless production process. Its board of directors approved signing an agreement with Henkel to acquire the German chemical firm’s TCLAD division in the US. The purchase includes all assets and business interests, including equipment,
SIZE MATTERS: Medium-sized hotels that do not have the support of parent groups are more vulnerable and are forced to take action, a REPro Knight Frank researcher said About 50 hotels across Taiwan are seeking to exit the market as they succumb to the bleak business outlook amid international travel restrictions imposed to combat the COVID-19 pandemic. Yomi Hotel (優美飯店) on Minsheng E Road, Sec 1, in Taipei is seeking to transfer ownership with an asking price of NT$950 million (US$32.15 million) and a pledge for a lease contract that guarantees a 3 percent return. The budget hotel, with room rates that start from NT$1,400 per night, maintains normal operations, but has been struggling since March, when the government placed restrictions on inbound and outbound travel. Occupancy rates for hotels in
With the US dollar expected to weaken in the next 12 months due to near-zero interest rates, investors should consider purchasing US corporate bonds, Standard Chartered Bank Taiwan Ltd (渣打台灣銀行) said on Thursday. The bank said that the US Federal Reserve since last month has been buying bonds issued by US companies to curb default rates. The US dollar is forecast to be weaker against the pound, the euro and the yen, as well as the Canadian dollar, the Swedish krona and the Swiss franc, as the greenback lacks high investment returns after the Fed in March slashed the benchmark interest rate
A Bollywood actor’s face tattooed on his arm, Sandeep Bacche’s devotion shocks few in India where stars enjoy semi-divine status, but even there the hallowed silver screen might be losing its shine to streaming services and pandemic fears. “Whenever things get better and theaters begin operations, I will watch three movies a day for sure just as a way to celebrate,” said the Mumbai rickshaw driver, who is recovering from the virus himself. However, others might not join the party. With cinemas shut for months due to a COVID-19 lockdown, and little prospect they will reopen soon, frustrated Bollywood producers have turned to