Local bourse depends on foreign funds, analysts say

Staff writer, with CNA

Tue, Jan 03, 2017 - Page 12

Whether the local equity market can continue its strong showing this year depends on the actions of foreign institutional investors, analysts said yesterday.

Allianz Global Investors Taiwan Technology Fund manager Liao Che-hung (廖哲宏) said foreign institutional buying was the main driving force behind the more than 10 percent increase in share prices on the local main board last year.

The movement of Taiwan’s equity market this year depends on whether foreign institutional investors start aggressive buying in Taiwan stocks when they return from the New Year holiday, Liao said.

Last year, the weighted index on the Taiwan Stock Exchange gained 915.44 points, with foreign institutional investors buying a net NT$300 billion (US$9.29 billion) in shares.

Market capitalization of the main board as of the end of last year was NT$2.74 trillion higher than the previous year, which translated into an average gain of about NT$285,800 by each of the 9.59 million equity investors in the Taiwanese market last year.

The launch of a new series of iPhones might spur waves of replacements this year, which would benefit local high-tech stocks, such as Hon Hai Precision Industry Co (鴻海), an assembler of iPhones and iPads, and Largan Precision Co (大立光), a smartphone camera lens supplier to Apple, Liao said.

Liao said that he was upbeat about the growth of listed companies in Taiwan and he predicted that their earnings would rise about an annual 11 percent.

He suggested that investors keep a close watch on the prices of flat panels and DRAM chips as continued growth of those stocks would help boost the local equity market.