Swiss brokerage firm UBS Securities has cut its forecast for the TAIEX for the end of the year from 9,750 to 9,200 points, its third downward revision in two months.
Taiwan’s exports slowed down in the first half of this year, and “we believe conditions are unlikely to improve substantially in the second half,” William Dong (董成康), equities and research head of UBS Securities’ Taipei branch, wrote in a note to clients on Friday last week.
“With many tech companies citing low demand visibility and/or ongoing inventory adjustments, we believe a seasonal pickup in tech shipments may prove short-lived,” Dong said. “One exception though is Apple’s supply chain.”
“For non-tech, the likes of bicycle and tire manufacturers and cement producers continue to face headwinds from the slowdown in China,” he added.
Dong said that investors should adopt a balanced strategy as “market jitters” are expected to increase in November and December, especially with the approach of the presidential and legislative elections in January.
The analyst changed his rating on semiconductors from “overweight” to “neutral” and on consumer staples from “neutral” to “overweight.”
He also moved food maker Uni-President Enterprises Corp (統一企業) onto UBS Securities’ most preferred stock list, replacing chip packaging service provider Advanced Semiconductor Engineering Inc (ASE, 日月光半導) and chip designer MediaTek Inc (聯發科)
In a report on June 4, the brokerage had dropped its TAIEX target from 10,600 to 10,000 points, citing concerns over fundamentals and uncertainty over the outcome of next year’s presidential election.
On July 2, UBS Securities lowered its TAIEX target again, from 10,000 to 9,750 points, citing potential risk to earnings.
The TAIEX yesterday dropped 0.78 percent in Taipei trading to 8,975.00 with turnover of NT$81.153 billion (US$2.59 billion).
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