The local bourse remains an attractive investment avenue after rallying 10 percent this year on the back of better corporate earnings aided by expectations of strong demand for new-generation technological devices, local fund houses said yesterday.
Schroder Investment Management Taiwan has raised its forecast for overall corporate earnings of listed firms to NT$1.74 trillion (US$57.95 billion) this year, an increase of 15.5 percent from last year, and exceeding the 12.3 percent pickup it predicted six months ago, company chief investment officer Jordan Chen (陳朝燈) said.
Companies in the supply chain of US technology giant Apple Inc have fared stronger than expected thus far this year, meriting the upward revision, Chen said.
Apple fans worldwide have held on to their old mobile devices as they await the much hyped launches of the next-generation iPhone, iPad and likely the iWatch later this quarter, Chen said, adding that the lackluster sales of devices made by South Korean rival Samsung Electronics Co lends support to the pent-up demand.
Taiwanese companies engaged in making semiconductors, camera lenses, phone casings and wearable devices have reported tight capacity despite the traditionally slow season, Chen said.
Meanwhile, telecommunications operators are enthusiastic about 4G investments and business opportunities linked to Internet of Things, Chen said.
Firms in non-technology sectors also put up healthy showings this year compared with last year, Chen said.
“The signs all point to earnings improvements this year,” the analyst told a media briefing.
Chen declined to speculate on the TAIEX target this year except to say that excessive liquidity drove the rallies in the first half and foreign funds helped provide the catalyst as the local bourse appears relatively stable compared with peers in Japan and other Asian nations.
The TAIEX closed down 0.43 percent at 9,489.98 yesterday on turnover of NT$100.18 billion, as investors sought profits in a knee-jerk reaction to a decline on Wall Street overnight.
Chen said fund movements have proved unpredictable, but the economic landscape looks bright going forward at home and abroad without major downside risks in sight.
Allianz Global Investors Taiwan Ltd (德盛安聯證券投信) shared the positive sentiment, saying many local investors wish to increase equity stakes, but refrain from action due to uncertainty about investment targets.
Nearly 70 percent of Taiwanese investors are upbeat about global stocks’ performance ahead, but only 40 percent would place more bets because of a lack of guidance on building portfolios, Allianz said, citing an internal survey.
Fifty-eight percent of investors polled are willing to tolerate losses of less than 10 percent and more than 30 percent have yet to gain profit from investment, though the MSCI global stock index has gained 5 percent this year, the survey found.
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