The recently thriving local bourse is expected to continue its upward momentum with the benchmark index hitting a peak of around 6,800 points in the upcoming quarter, pushed by a boost of capital and recovering high-tech stocks, the UBS Securities Ltd Taiwan Branch said yesterday.
"From now to the year's-end, we expect the benchmark index to fluctuate between 6,000 points and 6,700 points to 6,800 points, and end up at about 6,300 points or 6,400 points," Ken Chen (
Chen expects foreign investors, who have been attracted by the re-weighting of the TAIEX by Morgan Stanley Capital International (MSCI) Inc on May 31, to keep pouring funds into the local bourse, while local institutional investors have also been more upbeat on the local stock market.
Boosted by the MSCI reweighting, foreign investors have bought a net of NT$90.4 billion in Taiwanese stocks this month and NT$126.6 billion last month, compared to a net sale of just NT$24.7 billion in April.
In terms of the bank's favorite sectors, "we like tech now," Chen said, adding that it expects the high-tech sector to enjoy strong growth momentum after inventory cutbacks in the personal computer and semiconductor industries.
The analyst suggested that investors set their sights on second-tier players rather than first-tier firms in a handful of high-tech segments, like flat panels or notebooks.
Non-tech sectors like steel and chemicals are now at the peak of their cycle, and it is tough to say how long the upside will linger, Chen said. Finance stocks are not so appealing, due to a slow pace of consolidation that failed to excite investors, he said.
Chen made the remarks at yesterday's media briefing after the Swiss securities house wrapped up the two-day UBS Taiwan Conference, which drew about 200 overseas institutional investors from the US, Europe and other Asian countries to meet with over 60 local companies.
The participating Taiwanese firms were from a range of sectors including high-tech, financial and oil and gas, and included BenQ Corp (
Unlike the past focus on manufacturing, overseas investors showed high interest in Taiwanese companies' branding efforts and merger and acquisitions issues, UBS Securities Taiwan Branch's managing director Michael Chin said.
Taiwanese companies' China strategy was another point of interest for foreign investors, as Taiwanese firms' better flexibility and transparency is a nice proxy for foreigners who want to invest in China's huge growth potential, Chin added.
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