The TAIEX could hit 10,500 points within 12 months on the back of an improving bottom line among listed companies, US brokerage Goldman Sachs has said.
The brokerage said that Taiwanese businesses listed on the main board could enjoy a 14 percent annual increase in profits this year, followed by an 18 percent increase in the next, and this growth would in turn drive the equity market higher.
On Friday, the weighted index fell 0.16 percent to 9,510.05 points in a mild correction after it breached the 9,500-point mark a session earlier. So far this year, the bourse has gained about 10.4 percent on liquidity-driven buying.
Goldman Sachs said that compared with other countries in the region, Taiwan has a healthy current account balance and its currency has a competitive advantage over its regional peers.
The brokerage has issued an “overweight” recommendation on the local equity market, the same rating it has given to markets in China and India.
Goldman Sachs said that although the US, which is one of Taiwan’s largest markets, reported a 2.9 percent contraction in GDP for the first quarter, its economy is set to recover over the rest of the year and annual GDP growth is expected to reach 2.9 percent.
With Europe also on the road to recovery, such favorable external factors stand to benefit Taiwan’s export-oriented economy, giving a boost to local exporters’ profitability, Goldman Sachs said.
The brokerage said it favors the bellwether electronics sector, in particular semiconductor makers and local suppliers to Apple Inc, for which it gives an “overweight” recommendation on expectations that they will lead the broader market to move higher in the third quarter.
In the non-high tech sector, Goldman Sachs said it prefers insurance stocks, which have lagged behind the broader market.
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