The financial results for the first three months of the year are expected to move the local equity market in the second quarter after trading resumes today, market analysts said.
Allianz Global Investors Taiwan Technology fund manager Peter Liao (廖哲宏) said a stronger New Taiwan dollar could depress the profitability of many export-oriented companies on the stock exchange.
Following the equity market’s strong rise to almost 10,000 points, investors are likely to seize on foreign-exchange losses as an excuse to lock in their gains, Liao said.
The TAIEX closed down 0.37 percent at 9,811.52 on Friday last week before a four-day public holiday.
The small drop on Friday did not affect the performance for the entire first quarter, which saw the weighted index gain 6.03 percent on the back of large inflows of foreign funds.
The NT dollar appreciated about 6.4 percent against the US dollar in the first three months of the year, which is likely to result in lackluster first-quarter earnings reports among high-tech firms, due to large foreign-exchange losses, Liao said.
He said that investors should pay close attention to high-tech heavyweights, such as Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), and how export-oriented blue-chip stocks report their earnings in light of a stronger NT dollar when the earnings reporting seasons starts later this month.
TSMC, the world’s largest contract chipmaker, is to hold an investors’ conference on April 13 to announce its first-quarter results and second-quarter sales guidance.
Jih Sun Financial Holding Co (日盛金控) fund manager Chang Ya-wei (張亞瑋) said that if electronics firms whose shares made substantial gains in the first quarter report weak earnings due to foreign-exchange losses, investors are likely to punish them, which could create volatility in the broader market.
The mood of foreign institutional investors, who drove the upturn in the first quarter, will remain critical to the market’s performance in the second quarter, Chang said.
However, Liao said that despite the possibility of a volatile second quarter, investors should set their sights on Taiwanese suppliers to Apple Inc as they map out their investment strategies for this year.
Any major pullback on the market is likely to provide opportunities for buying “Apple concept stocks,” which have good fundamentals and are expected to benefit from the launch of new iPhones in the third quarter, Liao said.
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