Local shares last week defied heavy pressure from China’s military drills in waters around Taiwan, and investors this week are expected to pay attention to earnings results from several tech heavyweights as well as the latest economic data on exports and GDP.
The TAIEX closed at 15,036.04 points on Friday, posting a weekly increase of 0.24 percent from 15,000.07 on July 29, Taiwan Stock Exchange data showed.
Over the same period, the FTSE TWSE Taiwan 50 Index, which comprises Taiwan’s top 50 stocks in terms of market capitalization, closed up 0.93 percent at 11,750.15 points, while the Formosa Stock Index, which measures the aggregate performance of the Taiwan Stock Exchange and the Taipei Exchange, closed 0.16 percent higher at 17,113.71 points, the data showed.
“Although there are noises about the prospects for local equities in the third quarter, and the market is still digesting negative news such as anticipated inventory adjustment and weakening earnings outlook, investors’ confidence has recovered lately and returned to focus on fundamentals,” the Allianz Global Investors Taiwan Ltd (安聯投信) Taiwan equity research team said in a note on Friday.
“As market rationality gradually recovers, Taiwanese stocks which have recently lagged behind their US peers may have the opportunity to play catch-up, but the main premise is that no black swans emerge on the global political and economic fronts,” Allianz said in the note, referring to events that are extremely rare and unexpected, but would alter the market landscape substantially.
Investors this week are expected pay attention to high-tech heavyweights such as Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and Hon Hai Precision Industry Co (鴻海精密), and earnings reports from export-oriented blue-chip stocks for the latest quarter in light of growing recession risks.
TSMC, the world’s largest contract chipmaker, is to report its revenue for last month on Wednesday.
Hon Hai, a major assembler for Apple Inc, is also scheduled to host an investors’ conference on Wednesday to announce its results from the second quarter and sales guidance from the third quarter. The company last week reported that revenue last month grew 13.66 percent year-on-year to NT$475.1 billion (US$15.86 billion), the highest July figure in the company’s history.
Other tech heavyweights — such as Asustek Computer Inc (華碩), Yageo Corp (國巨), Compal Electronics Inc (仁寶) and Quanta Computer Inc (廣達) — are also slated to release their earnings results on Thursday and Friday, when more than 40 listed firms are to hold investors’ conferences.
Yuanta Securities Investment Consulting Co (元大投顧) said market confidence has recovered since the government’s activation of the NT$500 billion National Stabilization Fund last month.
“However, with an economic downturn still lingering, we expect the stabilization fund to support the TAIEX in the near term, but is unlikely to stimulate a turnaround,” Yuanta said in a report on Thursday, adding that the market faces headwinds that increase recession risks, such as the war in Ukraine, high inflation and the US Federal Reserve’s rapid interest rate hikes.
Several sets of economic data to be released this week are expected to weigh on market sentiment, equity strategists said.
The Ministry of Finance today is to release export and import data for last month.
Despite concerns about inflation and interest rate hikes, exports last month were estimated to increase by 10 to 13 percent year-on-year to US$41.7 billion to US$42.8 billion, the ministry forecast last month.
That would be the 25th straight month of annual gains, ministry data showed.
The ministry is scheduled on Wednesday to report national tax revenue for last month, and the market’s focus is to be on the revenue for securities transaction tax, which had posted six straight months of declines through June.
The Directorate-General of Budget, Accounting and Statistics (DGBAS) is to update its GDP growth forecast on Friday.
The DGBAS on July 29 cut its second-quarter GDP growth estimate to 3.08 percent from a previous estimate of 3.31 percent.
If the agency this week adjusts downward its 3.91 percent growth forecast for this year, the mood of investors could be affected, equity strategists said.
“Going forward, we anticipate the TAIEX to continue to consolidate, but with individual names to still see room for upward rotation,” Yuanta said.
The consultant said its favored stocks are companies in electric vehicle supply chains and the renewable energy sector, concept plays related to improving networking and industrial PC demand, and Apple suppliers experiencing high seasonal demand.
The US dollar on Friday rose against the euro, but pared gains late in a session that was muddied by quarter-end trading, while riskier commodity-led currencies fell sharply after European inflation hit a record high and US consumer spending increased faster than expected. Although the dollar index was showing its biggest quarterly gain since the first quarter 2015, but was registered its first weekly decline in three weeks. Sterling rose against the dollar after falling earlier in the day. The pound last showed four straight sessions of gains followed by wild declines on concerns about Britain’s plan to slash taxes and pay
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