Moderate upside seen for equities

By Crystal Hsu  /  Staff reporter

Thu, Sep 06, 2018 - Page 12

The nation’s equities market is likely to see moderate upside for the rest of the year, with a more balanced performance between the technology and non-technology sectors after adjustments in the first half of the year, Credit Suisse Group AG said yesterday.

“We’re positive the Taiwan technology sector and the overall market will see a modest upside in the remainder of this year, despite cuts to earnings earlier this year,” Carsten Stoehr, head of Asia Pacific financing, told a media briefing in Taipei.

The technology sector has bottomed out, but optimism for growth has been reignited by an Apple Inc product launch scheduled for Wednesday next week, the Zurich-based financial services company said.

Specification upgrades have been the key differentiator in the smartphone industry, where there would be significant opportunities over the next two years driven by imaging improvements, said Manish Nigam, regional head of technology research.

Average selling prices would continue to climb this year and the sales volume of smartphones would increase by 1 percent next year, reversing a 4 percent decline this year, Nigam said.

The first half of the year was “eventful” as the trade dispute between the US and China intensified and prompted foreign capital flight from Asia, Credit Suisse said.

Foreign outflows reached more than US$8 billion as of Aug. 31, ending six consecutive years of net buying that totaled US$47 billion, it said.

Still, the local bourse remained resilient, outperforming stock markets across Asia by 700 basis points, Taiwan equities research head Randy Abrams said.

Revenues and pre-tax income for listed firms equaled NT$13.6 trillion (US$441.47 billion) and NT$1.9 trillion in the first half of the year, an increase of 8.3 percent and 17.5 percent respectively from a year earlier, Taiwan Stock Exchange data showed.

Taiwanese technology firms are weathering mild headwinds, including trade concerns, elevated supply chain inventory and slowing smartphone demand in China, after second-quarter restocking, Abrams said.

The industry could have a decent earnings outlook from market share gains in the advanced foundry sector, consolidation in the back-end packaging and testing sector, and healthy positioning as growth drivers diversify beyond smartphones, he said.

Smart applications in emerging technologies, such as artificial intelligence, the Internet of Things, 5G and automotive applications would be the next big revenue drivers in the technology sector, Abrams said.

“We are seeing the penetration of electric vehicle battery technology speeding up in various key markets,” he added.