Emerging markets are expected to grow strongly next year, but inflation and the US-China trade dispute could slow their momentum, HSBC Global Asset Management Ltd said yesterday.
HSBC plans to slightly underweight Taiwanese stocks on expectations of slower growth compared with 12 months ago as they are affected by their foreign clients’ decreasing profits, head of equities Nick Timberlake said at a media briefing in Taipei.
“We see some headwinds for some companies here,” Timberlake said, adding that his equity team likes a lot of Taiwanese companies, but has to be cautious because their valuations are quite high.
While the team is still interested in adding individual stocks, it would wait until the second quarter of next year, when Taiwanese companies’ valuations and fundamentals are expected to improve to decide whether to add the Taiwanese market, he said, citing as an example several semiconductor companies that are not at their best now.
Emerging markets are expected to see their earnings per share (EPS) grow 14.5 percent this year and 11.8 percent next year, with all sectors expanding by double digits except for the energy sector, which has jumped more than 30 percent last year and this year, he said.
Emerging market equities continue to look attractive relative to history, with returns on equity reaching 13 percent in September, while emerging markets equity funds have experienced a net inflow of US$31 billion this year, he said.
Given strong growth in GDP and EPS, alongside positive valuations, the team has an optimistic view on emerging markets next year, he said.
However, risks exist, such as the US’ trade policies, a robust US dollar, capital repatriation, faster-than-expected exit from quantitative easing, unorthodox policy responses to external challenges by populist governments, China growth slippage, geopolitical shocks, as well as unexpected swings in commodities, HSBC said.
The team deems inflation the biggest risk, but “so far, it is unlikely to happen,” he said.
The team is monitoring the US-China trade dispute, which also negatively affects Russia and Brazil, he said.
However, compared with the trade dispute, a slowing Chinese economy and deleveraging would affect the global economy more, he said.
Taiwan will prioritize the development of silicon photonics by taking advantage of its strength in the semiconductor industry to build another shield to protect the local economy, National Development Council (NDC) Minister Paul Liu (劉鏡清) said yesterday. Speaking at a meeting of the legislature’s Economics Committee, Liu said Taiwan already has the artificial intelligence (AI) industry as a shield, after the semiconductor industry, to safeguard the country, and is looking at new unique fields to build more economic shields. While Taiwan will further strengthen its existing shields, over the longer term, the country is determined to focus on such potential segments as
UNCERTAINTY: Innolux activated a stringent supply chain management mechanism, as it did during the COVID-19 pandemic, to ensure optimal inventory levels for customers Flat-panel display makers AUO Corp (友達) and Innolux Corp (群創) yesterday said that about 12 to 20 percent of their display business is at risk of potential US tariffs and that they would relocate production or shipment destinations to mitigate the levies’ effects. US tariffs would have a direct impact of US$200 million on AUO’s revenue, company chairman Paul Peng (彭雙浪) told reporters on the sidelines of the Touch Taiwan trade show in Taipei yesterday. That would make up about 12 percent of the company’s overall revenue. To cope with the tariff uncertainty, AUO plans to allocate its production to manufacturing facilities in
COLLABORATION: Given Taiwan’s key position in global supply chains, the US firm is discussing strategies with local partners and clients to deal with global uncertainties Advanced Micro Devices Inc (AMD) yesterday said it is meeting with local ecosystem partners, including Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), to discuss strategies, including long-term manufacturing, to navigate uncertainties such as US tariffs, as Taiwan occupies an important position in global supply chains. AMD chief executive officer Lisa Su (蘇姿丰) told reporters that Taiwan is an important part of the chip designer’s ecosystem and she is discussing with partners and customers in Taiwan to forge strong collaborations on different areas during this critical period. AMD has just become the first artificial-intelligence (AI) server chip customer of TSMC to utilize its advanced
Chizuko Kimura has become the first female sushi chef in the world to win a Michelin star, fulfilling a promise she made to her dying husband to continue his legacy. The 54-year-old Japanese chef regained the Michelin star her late husband, Shunei Kimura, won three years ago for their Sushi Shunei restaurant in Paris. For Shunei Kimura, the star was a dream come true. However, the joy was short-lived. He died from cancer just three months later in June 2022. He was 65. The following year, the restaurant in the heart of Montmartre lost its star rating. Chizuko Kimura insisted that the new star is still down
RSS