Betting on the growth potential of the local bourse, Morgan Stanley & Co is leading a delegation of the nation's blue-chip companies to meet foreign investors whose combined assets are estimated at US$10 trillion, the securities house said yesterday.
"We are optimistic about the local market," Wallace Ko (
Ko said there was still room to boost foreign investment in the local stock market given its sound fundamentals. The foreign brokerage expects the combined earnings of Taiwanese listed firms to grow more than 20 percent this year and more than 10 percent next year.
Foreign investment in locally listed firms is currently estimated at about US$178 billion, accounting for roughly 33 percent of the domestic stock market's value. This is more than double the US$75 billion, or about 20 percent of total market value, recorded two years ago, according to figures provided by Morgan Stanley.
The US investment bank expects foreign investment to rise to some 40 percent of market value, similar to the level reached in South Korea, Ko said.
The roadshow, which was initiated in 2004 and called "Taiwan Corporate Day," will take the delegation to London, New York and Boston from May 23 to May 26
The event will provide an opportunity for local blue-chip firms,panieswhich combined make up over 20 percent of the market's capitalization, to attract more investments from more than 100 US and European institutional investors.
Led by Morgan Stanley's equity research head, Dickson Ho (何資文), the delegation comprises nine Tai-wanese firms.
Five of them are heavyweight high-tech players, including Taiwan Semiconductor Manufacturing Co (TSMC,
The other four companies come from traditional sectors like Cathay Financial Holding Co (
As of Monday, TSMC, Delta Electronics and Hon Hai Precision ranked among the top 20 foreign investors' favorites, with foreign shareholding ranging from 73.77 percent to 60.42 percent, according to statistics provided by the Taiwan Stock Exchange.
Banking on growing business opportunities, Morgan Stanley also announced that it would be expanding its scale in Taiwan this year by hiring more people and increasing its operations area, Ko said.
Foreign investment banks are quite bullish on the local stock market, as evidenced by the recent increases in their benchmark index target on expectations of further normalization of cross-strait relations.
Deutsche Bank said yesterday it lifted its index target to 8,700 points from 6,600 points, following BNP Paribas Securities (Taiwan) Co's announcement on Monday that it expected to see the TAIEX shoot up to 10,000 points by the end of next year.
However, Ho said that Morgan Stanley is sticking to its index target of 7,650 points unless it sees the government take concrete action to liberalize cross-strait ties.
The most anticipated opening up measures are allowing Chinese tourists to visit Taiwan, direct links and the removal of the regulatory ceiling that restricts listed companies' investment in China to a maximum of 40 percent of their net worth, he said.
Further liberalization could attract more foreign investments as well as encourage a repatriation of funds from Taiwanese investors in China, he said.
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