Taiwanese companies will see their earnings increase this year and next year, according to research released by Bank of America Merrill Lynch.
The US bank forecast that Taiwan’s overall corporate earnings will grow 18 percent this year and 10 percent next year, with a dividend yield ratio of 3.5 percent.
“The macro outlook has been unexciting in Taiwan, but we expect companies under our coverage to continue to see double-digit earnings growth,” said Katherine Hu (胡傳祥), a Taipei-based equity strategist at Merrill Lynch.
The discrepancy occurs because most exporters’ earnings and production are generated outside Taiwan and do not translate into domestic wage increases to help domestic growth in consumption, Hu said.
For individual sectors, Hu expects another strong year for Taiwan’s semiconductor industry, while Apple Inc’s supply chain moves away from South Korea — which means that Apple’s expansion of product lines will benefit its Taiwanese suppliers.
Moreover, a further opening up of local financial and wealth management products is likely to generate higher earnings for banks and brokers this year, with margins in the chemical industry also expected to rise moderately this year, she said.
Taiwan’s airlines are also forecast to benefit from the recovery of cargo shipments, led by the US, and local cement demand and supply might continue to improve, she added.
With the US economy turning for the better, Taiwan’s exports will gain momentum this year to help fuel local GDP growth, Switzerland-based UBS said on Saturday in its latest report on the Asia-Pacific economic outlook for this year.
Taiwan could post a 4 percent growth in GDP this year, UBS forecast. Compared with the GDP growth rates of the other Asian Tigers, Taiwan’s is predicted to be second only to Singapore’s 4.5 percent, on par with Hong Kong’s 4 percent and ahead of South Korea’s 3.4 percent, according to UBS.
Barclays PLC has also expressed optimism about Taiwan’s economic growth for this year, saying the export-oriented economy will benefit from an increase in investments in production equipment and material in the bellwether electronics sector.
In a recent research report, the British bank said Taiwan’s current account surplus for last month slowed from November last year as local manufacturers raised their investments in production equipment imports, with capital goods imports up 24.7 percent year-on-year, while the local manufacturing activity continued to expand in the month.
The bank said the increase in capital goods and expansion in production activity showed the local manufacturing sector holds a positive attitude toward global demand this year.
Last month, Taiwan’s imports grew 10.1 percent from a year earlier, compared with a 1.9 percent year-on-year decline in exports in the month, due to an increase in capital goods purchases.
According to the Chung-Hua Institution for Economic Research (中華經濟研究院), the country’s purchasing mangers’ index rose to 53.6 last month from November’s 52.
However, Gordon Sun (孫明德), director of the Macroeconomic Forecasting Center at the Taiwan Institute of Economic Research (台灣經濟研究院), said that the US economy could be overshadowed by political struggles in the first half of this year as the US Congress could renew a fight over the debt ceiling.
As a result, Taiwan’s exports to the US, which accounted for 10.7 percent of total outbound sales last year, are likely to remain slow until the second half of next year.
Sun said that many Taiwanese exporters are pushing to sharpen their competitive edge by working with strategic partnerships to penetrate the global market, adding their efforts are likely to pay off in the second half of this year or in the first half of next year.
He said that many Taiwanese manufacturers are turning to value-added products which emphasize services to attract buyers, while others have shifted attention from the US and Europe to target emerging markets. Sun said he expected such policy changes would start to benefit the local export sector in the second half of this year.
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) last week recorded an increase in the number of shareholders to the highest in almost eight months, despite its share price falling 3.38 percent from the previous week, Taiwan Stock Exchange data released on Saturday showed. As of Friday, TSMC had 1.88 million shareholders, the most since the week of April 25 and an increase of 31,870 from the previous week, the data showed. The number of shareholders jumped despite a drop of NT$50 (US$1.59), or 3.38 percent, in TSMC’s share price from a week earlier to NT$1,430, as investors took profits from their earlier gains
In a high-security Shenzhen laboratory, Chinese scientists have built what Washington has spent years trying to prevent: a prototype of a machine capable of producing the cutting-edge semiconductor chips that power artificial intelligence (AI), smartphones and weapons central to Western military dominance, Reuters has learned. Completed early this year and undergoing testing, the prototype fills nearly an entire factory floor. It was built by a team of former engineers from Dutch semiconductor giant ASML who reverse-engineered the company’s extreme ultraviolet lithography (EUV) machines, according to two people with knowledge of the project. EUV machines sit at the heart of a technological Cold
CHINA RIVAL: The chips are positioned to compete with Nvidia’s Hopper and Blackwell products and would enable clusters connecting more than 100,000 chips Moore Threads Technology Co (摩爾線程) introduced a new generation of chips aimed at reducing artificial intelligence (AI) developers’ dependence on Nvidia Corp’s hardware, just weeks after pulling off one of the most successful Chinese initial public offerings (IPOs) in years. “These products will significantly enhance world-class computing speed and capabilities that all developers aspire to,” Moore Threads CEO Zhang Jianzhong (張建中), a former Nvidia executive, said on Saturday at a company event in Beijing. “We hope they can meet the needs of more developers in China so that you no longer need to wait for advanced foreign products.” Chinese chipmakers are in
AI TALENT: No financial details were released about the deal, in which top Groq executives, including its CEO, would join Nvidia to help advance the technology Nvidia Corp has agreed to a licensing deal with artificial intelligence (AI) start-up Groq, furthering its investments in companies connected to the AI boom and gaining the right to add a new type of technology to its products. The world’s largest publicly traded company has paid for the right to use Groq’s technology and is to integrate its chip design into future products. Some of the start-up’s executives are leaving to join Nvidia to help with that effort, the companies said. Groq would continue as an independent company with a new chief executive, it said on Wednesday in a post on its Web
RSS