Taiwan’s stock market has healthy prospects, with the TAIEX likely to hit 10,000 points toward the end of the year as the export-reliant economy is likely to benefit from a stable recovery in the US, Credit Suisse Securities said yesterday.
Since the beginning of the year, Taiwan has recorded total net foreign buying of US$13 billion, the highest net fund inflow since 2009, accounting for nearly 40 percent of the net fund inflow to emerging Asian markets excluding China, the Swiss brokerage said.
The main index closed down 0.82 percent at 9,357.61 points yesterday on light turnover of NTT$77.59 billion (US$2.59 billion), Taiwan Stock Exchange data showed.
“We expect listed firms to register a 26 percent earnings growth this year,” Credit Suisse analyst Chung Hsu (許忠維) told a media briefing on the sidelines of its 15th Asian Technology Conference in Taipei.
The three-day conference, which ends tomorrow, has invited more than 110 Taiwanese companies from both technology and non-technology sectors to present their latest business forecasts to investors.
High savings and a current account surplus — more than 10 percent of GDP — should help the local bourse buffer the forthcoming exit of the US Federal Reserve’s quantitative easing, Hsu said.
The earnings of Taiwan’s upstream tech companies are highly correlated to US economic data, notably the purchasing managers’ index (PMI), Hsu said, adding that the US’ PMI is picking up.
Local downstream technology firms have been benefiting from a strong product cycle and a stronger US dollar, he said.
Many Taiwanese manufacturers are in the supply chain of global technology giants, including Apple Inc, which unveiled its new-generation products overnight.
Financial companies will continue to receive a boost from foreign currency loan growth and better fees and lower credit costs, Hsu said.
Almost all financial service providers have logged a hefty increase in wealth management product sales this year from the year-ago levels as a recovering economy raises risk appetite, he said.
Credit Suisse expects a better balance between tech and non-tech sectors in the second half of the year.
Taipei-based Randy Abrams, the brokerage’s head research analyst, said he expected the semiconductor industry would see a soft landing next quarter.
The seasonal volatility in the fourth quarter is expected to be milder this year than prior years because Apple provides a near-term cushion, Abrams said.
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, is likely shifting from a growth to value story, as earnings growth slows into the low season, he said.
While tight capacity helps TSMC to maintain firm prices, other upstream companies in the semiconductor industry are likely to see their stock prices affected by an inventory correction soon, Abrams said.
TSMC may also face increasing competition from South Korean rival Samsung Electronics Co in the second half of next year, he said.
Growth in the communications sector should moderate next year after low-end smartphones drive growth this year, he said, adding that wearable devices and the Internet of Things could be a potential new market for the sector.
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
CROSS-STRAIT TENSIONS: The US company could switch orders from TSMC to alternative suppliers, but that would lower chip quality, CEO Jensen Huang said Nvidia Corp CEO Jensen Huang (黃仁勳), whose products have become the hottest commodity in the technology world, on Wednesday said that the scramble for a limited amount of supply has frustrated some customers and raised tensions. “The demand on it is so great, and everyone wants to be first and everyone wants to be most,” he told the audience at a Goldman Sachs Group Inc technology conference in San Francisco. “We probably have more emotional customers today. Deservedly so. It’s tense. We’re trying to do the best we can.” Huang’s company is experiencing strong demand for its latest generation of chips, called
GLOBAL ECONOMY: Policymakers have a choice of a small 25 basis-point cut or a bold cut of 50 basis points, which would help the labor market, but might reignite inflation The US Federal Reserve is gearing up to announce its first interest rate cut in more than four years on Wednesday, with policymakers expected to debate how big a move to make less than two months before the US presidential election. Senior officials at the US central bank including Fed Chairman Jerome Powell have in recent weeks indicated that a rate cut is coming this month, as inflation eases toward the bank’s long-term target of two percent, and the labor market continues to cool. The Fed, which has a dual mandate from the US Congress to act independently to ensure