Mon, Jun 08, 2015 - Page 13 News List

UBS trims TAIEX target, cites fundamentals, election

Staff writer, with CNA

Swiss brokerage firm UBS Securities has cut its annual target for the TAIEX from 10,600 to 10,000 points amid concerns over fundamentals and uncertainty over the outcome of next year’s presidential election.

William Dong (董成康), equities and research head of UBS Securities’ Taipei branch, said he still expects the local bourse to rebound in the second half of the year on the back of dividend yields, the seasonal increase in tech shipments and policies implemented before the presidential election in January next year.

However, Dong said he was now less certain about the expected market rebound due to “moderating fundamentals” and “weak local sentiment,” leading to the downward revision of his TAIEX target, according to a research note from UBS on Thursday last week.

UBS Securities lowered its forecast for Taiwan’s market earnings growth this year to 9.8 percent as a result of weak PC shipments, a slowdown in China’s handset market and a semiconductor inventory adjustment, he said.

On the other hand, the Swiss brokerage still expects the central government to introduce more “market-friendly policies” in the second half of the year, ahead of the presidential election, Dong said.

“This could take the form of further financial industry liberalization, more overseas investment or a potential increase in equity investments for government funds,” Dong said.

“However, local retail investors currently appear less than enthused given uncertainty about the outcome of the election,” he added.

As a result, Dong rated the tech and telecom sectors “overweight” and recommended companies in Apple Inc’s supply chain as his most preferred stocks.

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