The benchmark TAIEX could hit 9,200 points this year — a big increase from Friday’s close of 8,513.68 — as the global economy recovers, Capital Securities Corp (群益證券) predicted last week.
In a research report, the brokerage said the index could hit a high of about 8,800 points in the first quarter, adding that as the bellwether electronics sector bounces back, the index would likely keep growing in the second quarter to push 9,200 points by the second half of the year.
Capital Securities expects the high-tech sector to post gains in the second quarter, with Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) — the most heavily weighted stock in the local market — expected to attract buying.
TSMC, the world’s largest contract electronics maker, is undergoing inventory adjustments this quarter, but is expected to boost the entire electronics sector when its sales growth momentum resumes in the April-to-June period, the brokerage forecast.
Capital Securities also said that Apple Inc is likely to launch new devices later in the year, a move that is expected to lift quarter-on-quarter shipments from Taiwanese suppliers such as Hon Hai Precision Industry Co (鴻海) and Largan Precision Co (大立光).
Those boosts are likely to be followed in the third quarter by government stimulus measures aimed at encouraging investors to pick up stocks, a move which could push up the TAIEX before local government elections are held in late November, Capital Securities said.
However, the brokerage cautioned investors to keep a close eye on the US market, which could encounter volatility this year after posting substantial gains last year.
Based on Taiwan Stock Exchange Corp (TWSE, 台灣證券交易所) tallies, foreigner institutional investors have sold a net NT$47.994 billion (US$1.58 billion) in Taiwanese shares so far this year, as the US Federal Reserve’s stimulus taper raises fears of market volatility.
In a research note on Friday, HSBC Securities Taiwan Corp forecast market volatility to continue in the coming months, but added that Taiwan is potentially better-positioned than many other emerging markets to withstand the turmoil because of the nation’s large current account surplus and ample foreign exchange reserves, it added.
“The taper and potential withdrawal of US dollar liquidity from the region should give Taiwanese banks a chance to put their excess liquidity to work,” HSBC said.
It recommend investors load up on technology shares in the first half, such as TSMC, Advanced Semiconductor Engineering Inc (日月光), Novatek Microelectronics Corp (聯詠), Chipbond Technology Corp (頎邦) and Radiant Opto-Electronics Corp (瑞儀).
Additional reporting by Kevin Chen
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