Thu, Sep 07, 2017 - Page 11 News List

Credit Suisse reserved on TAIEX in fourth quarter

BITCOIN BOOM:While cryptocurrencies are still a niche asset, they have driven sales growth for tech firms and could boost demand for hardware made by local firms

By Ted Chen  /  Staff reporter

Credit Suisse Group AG yesterday gave a reserved outlook for the TAIEX in the final quarter of this year due to slowing corporate earnings growth following marked gains in the first half.

Taiwanese companies’ earnings growth began to slow in May, followed by consecutive annual declines in monthly profits, dragging on this quarter’s results, Credit Suisse Taiwan market strategist Chung Hsu (許忠維) said at a news conference in Taipei for the 18th Credit Suisse Asian Technology Conference.

In the first eight months of the year, Taiwanese firms’ earnings-per-share performance grew 23 percent in US dollar terms, compared with 14 percent for the whole of last year, Hsu said.

Hsu, who kept a year-end forecast for the TAIEX unchanged at 10,200 points, said that a rebound is expected to propel the weighted index to 11,000 next year.

Local companies could also see reduced foreign exchange pressure as the strength of the New Taiwan dollar continues to stabilize in the second half, Hsu said.

Further buying by foreign institutional investors is likely to be limited, following strong net buying totaling US$8.7 billion at the end of last month, Hsu said, adding that continued momentum would be dependent on retail investors, as large domestic institutional investors, such as life insurers, have poured more than US$9.6 billion into stocks in the past 12 months.

Foreign institutional investors have raised their weighting on the technology sector, increasing it to 90 percent this year, compared with 60 percent a year ago, Hsu added.

While optimism about a trio of iPhones that are expected to be unveiled this month — the most anticipated iteration since the iPhone 6 in 2014 — have propped up technology stocks, price performance has begun to outpace earnings revisions, said Randy Abrams, head of Credit Suisse’s Taiwan equities and Asian semiconductors research.

Newer areas, such as automotive electronics, cloud data center build-outs, Internet of Things applications, voice assistants, gaming and artificial intelligence will continue to help to diversify demand, Abrams said.

In particular, following bitcoin’s meteoric surge this year, demand has been rising for hardware used in mining the cryptocurrency, such as video cards, he added.

While crytocurrencies are still considered a niche asset, they have generated tangible sales growth for companies such as Nvidia Corp, while demand for mining could also boost other areas, including memory and data center equipment, which are supplied by Taiwanese companies.

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