Local stocks may enter a correction phase on moderate turnover this week because investors may opt to stay on the sidelines as the nation prepares to go to the polls on Saturday in the special municipality elections, securities analysts said.
The benchmark TAIEX declined 0.12 percent last week to 8,306.12 points from the previous week, following a 1.58 percent decline in the week before that, the Taiwan Stock Exchange’s data showed.
Daily turnover shrank to an average of NT$87.7 billion (US$2.86 billion) last week from NT$110.8 billion a week earlier, as cautious sentiment started to weigh on the market, Allianz Global Investors Taiwan Ltd (德盛安聯證券投信) said.
“The local bourse has cooled down ahead of the mayoral elections” after it rallied to a 29-month high early this month, said Sunny Chung (鍾兆陽), a manager at the Taiwan branch of the Munich, Germany-based financial service provider.
The TAIEX is likely to consolidate even though Taiwan’s economy expanded 9.8 percent in the third quarter, which was stronger than market expectations of between 7 percent and 8 percent, Chung said.
Chung dismissed concern of a double-dip recession scenario in the US economy after the US Federal Reserve introduced a -second round of quantitative easing to stimulate economic growth.
However, Kuo Chien-cheng (郭建成), a fund manager at Taishin Investment Trust Co (台新投信), said the movement of the US dollar would decide the short-term outlook of the liquidity-driven local bourse.
“Taiwan stocks would rebound on signs of US dollar weakness,” Kuo said in a client note on Friday.
Henry Chen (陳志恆), an investment research director at KBC Concord Asset Management Co (康和比聯投信), said he expected the TAIEX to consolidate between 8,300 and 8,500 points, adding that China’s counter-inflation measures and appreciation of the yuan would weigh on companies that have operations in China.
Chung and Kuo recommended electronics shares and players in the Chinese market, such as smartphones, auto and food makers, that may climb on rush orders from the world’s most populous country ahead of the Lunar New Year.
Barclays Capital, the British investment bank, voiced a similar view and maintained the overweight rating for HTC Corp (宏達電), the world’s leading maker of smartphones running on the Windows Mobile and Android platforms.
The lender upgraded HTC’s target price from NT$760 to NT$1,200 last week, on grounds mobile computing technology is still in the early stages of development and dynamics in the industry will remain healthy next year, leading to strong earnings for sector leaders.
Shares of HTC have risen 125.65 percent this year to close at NT$827 on Friday, outperforming the TAIEX’s 1.44 percent increase over that same period, the stock exchange’s data showed.
Barclays Capital also recommended Unimicron Technology Corp (欣興電子), a Taoyuan-based printed circuit board maker and Silitech Technology Corp (閎暉), a supplier of mobile phone keypads, on grounds both are leaders in the supply chain fpr Nokia Oyj.
JPMorgan, on the other hand, suggested investors look at bank shares, with First Financial Holding Co (第一金控) and Chang Hwa Bank (彰化銀行) coming in among its top picks. Shares of First Financial have risen 0.25 percent to NT$19.9 so far this year, while Chang Hwa has increased 32.46 percent to NT$20.2.
The US brokerage said it saw strong credit demand from the non-tech manufacturing sector and small and medium-size enterprises, and it expects the government to increase borrowing to fund infrastructure projects next year.
Three experts in the high technology industry have said that US President Donald Trump’s pledge to impose higher tariffs on Taiwanese semiconductors is part of an effort to force Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) to the negotiating table. In a speech to Republicans on Jan. 27, Trump said he intends to impose tariffs on Taiwan to bring chip production to the US. “The incentive is going to be they’re not going to want to pay a 25, 50 or even a 100 percent tax,” he said. Darson Chiu (邱達生), an economics professor at Taichung-based Tunghai University and director-general of
Hon Hai Precision Industry Co (鴻海精密) is reportedly making another pass at Nissan Motor Co, as the Japanese automaker's tie-up with Honda Motor Co falls apart. Nissan shares rose as much as 6 percent after Taiwan’s Central News Agency reported that Hon Hai chairman Young Liu (劉揚偉) instructed former Nissan executive Jun Seki to connect with French carmaker Renault SA, which holds about 36 percent of Nissan’s stock. Hon Hai, the Taiwanese iPhone-maker also known as Foxconn Technology Group (富士康科技集團), was exploring an investment or buyout of Nissan last year, but backed off in December after the Japanese carmaker penned a deal
WASHINGTON POLICY: Tariffs of 10 percent or more and other new costs are tipped to hit shipments of small parcels, cutting export growth by 1.3 percentage points The decision by US President Donald Trump to ban Chinese companies from using a US tariff loophole would hit tens of billions of dollars of trade and reduce China’s economic growth this year, according to new estimates by economists at Nomura Holdings Inc. According to Nomura’s estimates, last year companies such as Shein (希音) and PDD Holdings Inc’s (拼多多控股) Temu shipped US$46 billion of small parcels to the US to take advantage of the rule that allows items with a declared value under US$800 to enter the US tariff-free. Tariffs of 10 percent or more and other new costs would slash such
SENSOR BUSINESS: The Taiwanese company said that a public tender offer would begin on May 7 through its wholly owned subsidiary Yageo Electronics Japan Yageo Corp (國巨), one of the world’s top three suppliers of passive components, yesterday said it is to launch a tender offer to fully acquire Japan’s Shibaura Electronics Co for up to ¥65.57 billion (US$429.37 million), with an aim to expand its sensor business. The tender offer would be a crucial step for the company to expand its sensor business, Yageo said. Shibaura Electronics is the world’s largest supplier of thermistors, with a market share of 13 percent, research conducted in 2022 by the Japanese firm showed. If a deal goes ahead, it would be the second acquisition of a sensor business since