Citigroup Global Markets Inc expects the TAIEX to top the 10,000 point mark and even push up toward 10,500 points by the end of this year on the back of a recovering economy that has boosted corporate earnings.
The brokerage said the local bourse is to also gain support from the return of domestic institutional and retail investors to the trading floor, while foreign institutional investors have stood on the buy side since the beginning of this year.
It said it is upbeat about the electronics sector, which could serve as a stimulus to the broader market for the rest of the year.
On Friday, the main board closed down 0.46 percent at 9,273.79 points on a mild technical correction after the market hit a fresh high in more than six years a session earlier. Despite the setback, many market analysts believe a future uptrend is in sight.
Citigroup said earnings growth in the the high-tech sector will accelerate, as many international electronics brands, including Apple Inc, are scheduled to unveil new models later this year, which will push up their Taiwanese suppliers’ shipments.
The brokerage has been also upbeat about demand for wearable devices and products related to the “Internet of Things” and predicts that the domestic electronics sector will ride the wave of the trend.
Citigroup said that with local elections scheduled for November, the government could come up with measures to boost the local bourse in a bid to win more votes in the elections.
Citigroup has urged investors to buy into contract chipmaker Taiwan Semiconductor Manufacturing Co (台積電), Hon Hai Precision Industry Co (鴻海), which assembles iPhones and iPads for Apple Inc, and integrated circuit packaging and testing services provider Advanced Semiconductor Engineering Inc (日月光).
Citigroup has also named smartphone camera lens supplier Largan Precision Co (大立光), metal casing maker Catcher Technology Co (可成), and contract notebook computer makers Pegatron Corp (和碩) and Compal Electronics Inc (仁寶) on its “buy” list.
In the non high-tech sector, Citigroup favors Nan Ya Plastics Corp (南亞塑膠) and Taishin Financial Holding Co (台新金控).
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