Sat, Jan 13, 2018 - Page 12 News List

Taiwan stocks’ bull run seen coming to a halt

TIGHTENING:Some analysts, fund managers and traders surveyed saw rising interest rates and net outflows as the main risks, while others fear a bourse skewed toward Apple suppliers


There is little room for further gains in Taiwanese equities this year as central banks tighten policy, a survey showed.

The benchmark TAIEX might rise as high as 11,500 before ending the year at 11,000, barely changed from the level it is at now, according to the median estimate of 12 analysts, fund managers and traders.

Half of them picked rising interest rates and net outflows as the main risks to the local market.

The TAIEX surged 15.01 percent last year, its best performance since 2009, helped by a global technology rally and US$6.1 billion of inflows.

As always in a stock market heavily skewed toward Apple Inc suppliers, performance might pivot on the success or failure of iPhone sales. Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which reports earnings next week, and Hon Hai Precision Industry Co (鴻海) account for almost a quarter of the TAIEX’s overall weighting.

“There might be a de-rating of iPhone suppliers,” Hua Nan Securities Co (華南永昌證券) vice president David Lu (呂大偉) said, adding that that is because “new models coming up this year might not offer huge upgrades or new features.”

Traders were divided in the survey, with three respondents naming disappointing iPhone sales as presenting a risk for investors, and four saying Apple suppliers were among their favorite sectors.

While TSMC shares trade near a record, Hon Hai has tumbled 25 percent from its June peak.

Taiwan’s central bank expects to increase borrowing costs this year for the first time since 2011, an earlier survey found.

The New Taiwan dollar on Friday last week rose to its highest close in four years. Investors will see whether its strength is weighing on exporter earnings when TSMC announces its results on Thursday.

E.Sun Investment Consulting Co (玉山投顧) was the most bullish in the survey, predicting the TAIEX would end this year at 12,500, surpassing the record closing level set in 1990, while Fubon Securities Investment Services Co (富邦投顧) was the most bearish, forecasting 10,000.

The TAIEX rose 0.68 percent to end at 10,883.96 points yesterday.

Among the survey’s other findings was that the TAIEX will end the first quarter at 11,000 and peak this year at 11,500 in the first half, while automobile electronics and electric-car component suppliers topped the list of favored sectors, picked by nine survey participants.

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