The TAIEX may outperform other major Asian stock markets this year thanks to government policies, new tech product launches and continuous capital inflows, HSBC Securities (Taiwan) Co Ltd (匯豐證券) said yesterday.
Despite this, the brokerage kept its year-end forecast for the TAIEX at 7,700 points, compared with Credit Suisse’s year-end forecast of 9,500, Bank of America Merrill Lynch’s 8,600, UBS Securities’ 8,550 and the 8,150 predicted by Deutsche Bank Securities Inc.
The benchmark index yesterday gained 0.12 percent, or 9.24 points, to close at 7,981.94, as a total of 1,455 stocks closed up and 2,535 finished down, while 415 remained unchanged.
Jenny Lai (賴惠娟), head of research at HSBC Securities in Taiwan, said the country’s economy could bottom out in the first half of the year, although the stock market would see a range-bound consolidation in the second quarter.
“Based on data from the Ministry of Economic Affairs, a rebound in Taiwan’s export orders started last month,” Lai told a media briefing.
However, investors are still looking for more evidence to support an earnings recovery for domestic companies, she said.
Lai said she expects three key themes to drive market performance this year, namely the government’s further opening to China, a new cycle of technology products and strong liquidity.
The three upside stories are in line with the brokerage’s positive view on consumer, financial and hardware sectors.
Since policies relating to inbound capital investment from China are likely to loosen up soon, Lai said it would eventually drive up domestic consumption momentum and benefit related sectors.
Meanwhile, Apple Inc’s potential new products, as well as new non-Apple electronics devices, would both support the technology sector’s stock prices this year.
Lai said growth in the non-Apple supply chain, led by new products such as the Ultrabook and Windows 8, is expected to accelerate and start to have a positive impact on the TAIEX in the second half of the year.
Strong liquidity inflows, which have been seen so far this year, would be the other major factor supporting the stock market, she said.
“Many foreign investors did not expect to see the TAIEX rally in the first quarter, so they missed a chance to enter the market,” Lai said, adding that foreign capital may return later this year to drive up the stock market.
Nevertheless, Lai said solid fundamentals would still be prerequisites for the TAIEX’s outperformance, adding that the speed at which domestically listed companies will see a profitability rebound would weigh on the stock market’s trend for this year.