The results of Saturday’s nine-in-one elections might result in short-term volatility on the local stock market, equity strategists said yesterday.
However, the market’s medium to long-term outlook would rely more on the ongoing US-China trade row and the meeting scheduled between US President Donald Trump and Chinese President Xi Jinping (習近平) in Buenos Aires later this week, they said.
The ruling Democratic Progressive Party (DPP) won in only six of 22 cities and counties, with 15 cities or counties going to the Chinese Nationalist Party (KMT), including some significant DPP strongholds, such as Kaohsiung and Yilan County.
“The developments in global stock markets will be the major driving force behind the future movement of local equities,” Masterlink Securities Investment Advisory Corp (元富投顧) president Liu Kun-hsi (劉坤錫) was quoted by the Central News Agency as saying.
“Investors need to observe the content of Trump’s conversation with Xi, as their meeting will weigh on global equities,” Liu said.
Ahead of the local elections, the TAIEX on Friday last week closed down 0.49 percent at 9,667.30, a decline of 1.3 percent from a week earlier, with market turnover on the main bourse falling to NT$76.6 billion (US$2.48 billion) — its lowest level this year.
Allianz Global Investors Taiwan Technology Fund (安聯台灣科技基金) manager Peter Liao (廖哲宏) said the impact of the election results would be short-term.
“The widening volatility in the US stock market, the changes in the outlook for some technology industries and the upcoming meeting between Trump and Xi are major factors that will weigh on local equities in the near term,” Liao said in a statement.
Allianz maintains a “neutral and conservative” view on the main bourse, with the market’s mid to long-term outlook closely linked to the economic and political wrestling between the US and China, Liao said.
Yuanta Securities Investment Consulting Co (元大投顧) said that the downside risks for local equities would continue to exist, regardless of the outcome of the elections, and the market would likely remain choppy for a while.
Yuanta, which last week lowered its TAIEX target from 10,900 to 9,800 points, said it has become more cautious on the main bourse and forecast zero earnings growth next year for the companies it covers, which account for 75 percent of TAIEX market cap.
“We would underweight companies with greater China capacity and major exposure to US customers, especially Apple players,” Yuanta analyst Vincent Chen (陳豊丰) said in a note.
“For non-tech, we believe insurance names will suffer from rising hedging costs overseas. We are also cautious on petrochemicals due to the oil price downtrend and weak downstream demand. High dividend and defensive plays, such as telecoms and banks, could be safe havens,” he said.
However, the KMT’s performance might add uncertainty regarding the progress of a tax amnesty proposal by the government to attract overseas Taiwanese money back home, he added.
Several DPP legislators have proposed tax breaks for companies and individuals who repatriate money in order to boost local investment and improve the economy, but government agencies, including the central bank, the Financial Supervisory Commission and the Ministry of Finance, have yet to reach a consensus on the issue, because of concerns about money laundering, fraud and tax fairness.
PERSISTENT RUMORS: Nvidia’s CEO said the firm is not in talks to sell AI chips to China, but he would welcome a change in US policy barring the activity Nvidia Corp CEO Jensen Huang (黃仁勳) said his company is not in discussions to sell its Blackwell artificial intelligence (AI) chips to Chinese firms, waving off speculation it is trying to engineer a return to the world’s largest semiconductor market. Huang, who arrived in Taiwan yesterday ahead of meetings with longtime partner Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), took the opportunity to clarify recent comments about the US-China AI race. The Nvidia head caused a stir in an interview this week with the Financial Times, in which he was quoted as saying “China will win” the AI race. Huang yesterday said
Nissan Motor Co has agreed to sell its global headquarters in Yokohama for ￥97 billion (US$630 million) to a group sponsored by Taiwanese autoparts maker Minth Group (敏實集團), as the struggling automaker seeks to shore up its financial position. The acquisition is led by a special purchase company managed by KJR Management Ltd, a Japanese real-estate unit of private equity giant KKR & Co, people familiar with the matter said. KJR said it would act as asset manager together with Mizuho Real Estate Management Co. Nissan is undergoing a broad cost-cutting campaign by eliminating jobs and shuttering plants as it grapples
The Chinese government has issued guidance requiring new data center projects that have received any state funds to only use domestically made artificial intelligence (AI) chips, two sources familiar with the matter told Reuters. In recent weeks, Chinese regulatory authorities have ordered such data centers that are less than 30 percent complete to remove all installed foreign chips, or cancel plans to purchase them, while projects in a more advanced stage would be decided on a case-by-case basis, the sources said. The move could represent one of China’s most aggressive steps yet to eliminate foreign technology from its critical infrastructure amid a
MORE WEIGHT: The national weighting was raised in one index while holding steady in two others, while several companies rose or fell in prominence MSCI Inc, a global index provider, has raised Taiwan’s weighting in one of its major indices and left the country’s weighting unchanged in two other indices after a regular index review. In a statement released on Thursday, MSCI said it has upgraded Taiwan’s weighting in the MSCI All-Country World Index by 0.02 percentage points to 2.25 percent, while maintaining the weighting in the MSCI Emerging Markets Index, the most closely watched by foreign institutional investors, at 20.46 percent. Additionally, the index provider has left Taiwan’s weighting in the MSCI All-Country Asia ex-Japan Index unchanged at 23.15 percent. The latest index adjustments are to
RSS