Morgan Stanley recommended investors boost their holdings of Taiwanese stocks on “subdued” inflationary pressures and reduce South Korean equities on higher policy risks and the prospect of lower earnings growth.
“The growth versus inflation mix appears more favorable in Taiwan than [South] Korea,” Morgan Stanley analysts led by Jonathan Garner wrote in a report yesterday.
The brokerage upgraded Taiwan to “overweight” from “equal-weight” and downgraded South Korea to “equal-weight” from “overweight.”
The TAIEX has climbed 10 percent in the past 12 months, lagging behind a 20 percent advance by South Korea’s KOSPI, even as Taiwan’s consumer prices grew on average less than a third of the pace of its North Asian neighbor during the past three months, Morgan Stanley said.
The brokerage said it expected benchmark interest rates to peak at 3.5 percent in South Korea versus 2.13 percent for Taiwan.
“All other things being equal, this more aggressive rate hike stance in [South] Korea presents more of a threat to the domestically facing parts of the equity market,” the analysts wrote.
The KOSPI sank 1.7 percent to 2,069.92 at the close yesterday, the biggest loss since Nov. 11 last year. Construction and transportation stocks led the declines.
The TAIEX dropped 0.8 percent to 8,954.38.
Analysts have lowered their earnings estimates for South Korea in the near term compared with the emerging markets average, while raising them for Taiwan, they wrote.
A further “weak spot” for South Korea is the market’s “low dividend yield” compared with Asian neighbors excluding Japan and other emerging markets, Morgan Stanley said.
“[South] Korea’s payout ratio of reported earnings of 13.5 percent currently is one of the lowest in emerging markets along with India and Russia,” the analysts wrote.
“Taiwan’s payout ratio is 53.1 percent currently. The trailing dividend yield for Taiwan is currently 3.2 percent versus 1.1 percent for Korea and an Asia Pacific ex-Japan average of 2.6 percent,” they said.
Taiwan is also expected to enter a “super-cycle” from this year to 2020 as the nation benefits from warmer ties with China, the brokerage said.
The Eurovision Song Contest has seen a surge in punter interest at the bookmakers, becoming a major betting event, experts said ahead of last night’s giant glamfest in Basel. “Eurovision has quietly become one of the biggest betting events of the year,” said Tomi Huttunen, senior manager of the Online Computer Finland (OCS) betting and casino platform. Betting sites have long been used to gauge which way voters might be leaning ahead of the world’s biggest televised live music event. However, bookmakers highlight a huge increase in engagement in recent years — and this year in particular. “We’ve already passed 2023’s total activity and
BIG BUCKS: Chairman Wei is expected to receive NT$34.12 million on a proposed NT$5 cash dividend plan, while the National Development Fund would get NT$8.27 billion Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday announced that its board of directors approved US$15.25 billion in capital appropriations for long-term expansion to meet growing demand. The funds are to be used for installing advanced technology and packaging capacity, expanding mature and specialty technology, and constructing fabs with facility systems, TSMC said in a statement. The board also approved a proposal to distribute a NT$5 cash dividend per share, based on first-quarter earnings per share of NT$13.94, it said. That surpasses the NT$4.50 dividend for the fourth quarter of last year. TSMC has said that while it is eager
‘IMMENSE SWAY’: The top 50 companies, based on market cap, shape everything from technology to consumer trends, advisory firm Visual Capitalist said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) was ranked the 10th-most valuable company globally this year, market information advisory firm Visual Capitalist said. TSMC sat on a market cap of about US$915 billion as of Monday last week, making it the 10th-most valuable company in the world and No. 1 in Asia, the publisher said in its “50 Most Valuable Companies in the World” list. Visual Capitalist described TSMC as the world’s largest dedicated semiconductor foundry operator that rolls out chips for major tech names such as US consumer electronics brand Apple Inc, and artificial intelligence (AI) chip designers Nvidia Corp and Advanced
Pegatron Corp (和碩), an iPhone assembler for Apple Inc, is to spend NT$5.64 billion (US$186.82 million) to acquire HTC Corp’s (宏達電) factories in Taoyuan and invest NT$578.57 million in its India subsidiary to expand manufacturing capacity, after its board approved the plans on Wednesday. The Taoyuan factories would expand production of consumer electronics, and communication and computing devices, while the India investment would boost production of communications devices and possibly automotive electronics later, a Pegatron official told the Taipei Times by telephone yesterday. Pegatron expects to complete the Taoyuan factory transaction in the third quarter, said the official, who declined to be
RSS