Taiwanese stocks are expected to continue to rebound this week, in line with a rise in US equities in the past few sessions, Allianz Global Investors Taiwan Ltd’s (安聯投信) Taiwan equity research team said in a note on Friday.
However, investors should be cautious in chasing prices and for the time being focus on select stocks with better fundamentals, Allianz said.
The TAIEX closed at 15,288.97 points on Friday, posting a weekly increase of 1.68 percent from 15,036.04 points on Aug. 5, Taiwan Stock Exchange data showed.
Photo: CNA
Over the same period, the FTSE TWSE Taiwan 50 Index, which comprises Taiwan’s top 50 stocks in terms of market capitalization, rose 1.13 percent to 11,882.44 points, while the Formosa Stock Index, which measures the aggregate performance of the Taiwan Stock Exchange and the Taipei Exchange, gained 1.74 percent to 17,410.68 points, the data showed.
“Based on indicators such as return on equity, Taiwanese stocks seem to have broadly reflected the most pessimistic scenario,” Allianz said. “However, judging from the latest financial results and outlooks unveiled by several listed companies, the market has not fully reflected investors’ concerns over the effects of inventory adjustments and the weakening end-market demand.”
In the near term, the local stock market is likely to follow the lead of Wall Street, as the 8.5 percent rise in the US consumer price index last month was better than expected and might lead the US Federal Reserve to continue with moderate interest rate hikes, equity strategists said.
Investors are expected to watch closely this week’s investors’ conferences at several financial heavyweights such as E.Sun Financial Holding Co (玉山金控), King’s Town Bank (京城銀行), Taiwan Cooperative Financial Holding Co (合庫金控) and Fubon Financial Holding Co (富邦金控).
They are likely to focus on the impact of interest rate hikes on net interest margins, the effects of volatile equity and debt markets on their capital adequacy ratio, and the profit outlook in the second half of the year in light of the Fed’s continued rate hikes, the strategists said.
Some tech heavyweights — such as flat-panel maker Innolux Corp (群創光電), e-paper display maker E Ink Holdings Inc (元太科技), semiconductor component distributor WPG Holdings Co (大聯大投資控股) and silicone products supplier Topco Technologies Corp (崇越電) — are also slated to release their earnings results later this week to shed light on inventory adjustments, capital spending plans and supply chain developments, they added.
Franklin Templeton Investment Co Ltd (富蘭克林華美投信) said the movement of Taiwanese stocks would be relatively stable in the near term, considering that China has ended its military drills off Taiwan and international funds have recently returned to the local market.
“The TAIEX is forecast to continue consolidation and show a range-bound trading this quarter and next quarter, with selected semiconductor, industrial computer, leisure, apparel and footwear stocks the main focus of investors’ attention,” Franklin Templeton said in a note.
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