Taiwanese stocks are likely to shrug off geopolitical concerns to mount a recovery next year, led by a resurgence in chip-sector earnings, according to the nation’s largest active equity fund manager.
Taiwan’s semiconductor companies will see earnings growth of around 30 percent next year, with 20 percent growth expected for Taiwan-listed companies as a whole, Ivy Chen (陳彥婷), general manager and head of Taiwan at Allianz Global Investors, said in an interview on Tuesday.
Escalating tensions between Taiwan, China and the US and fears of a global economic slowdown have driven foreign investors to pull US$7.4 billion from Taiwanese stocks this year, the most in Asia, according to Bloomberg-compiled data. Still, the benchmark TAIEX has gained 16 percent year to date, the second-best-performing major stock market in Asia after Japan.
Photo: Reuters
Geopolitical risk is “not news for Taiwanese people,” Chen said, adding that similar risks could emerge anywhere in the world in the wake of the Russian-Ukraine war and the Israel-Hamas conflict. “The best way to reduce geopolitical risks is by diversifying in terms of asset class or sector.”
The main drivers of growth for Taiwan’s chip companies include improving end-consumer demand and the destocking of the sector coming to an end, Chen said, adding that demand for semiconductors related to artificial intelligence will continue to boom.
She expects Taiwanese stocks next year to top this year’s gains.
The Taipei-based Market Intelligence and Consulting Institute on Wednesday forecast that production value of Taiwan’s semiconductor industry next year would increase 13.7 percent to NT$4.29 trillion, from NT$3.77 trillion this year.
The increase in output would be driven mainly by the wafer foundry sector as chipmakers expand capacity for advanced manufacturing, the institute said in a report.
Institute consultant Sagitta Pan (潘健光) said the growth momentum of the semiconductor industry would rely on emerging applications such as innovative information services, energy and environmental protection, and technology integration.
In particular, artificial intelligence (AI), new energy and artificial intelligence of things will become the main growth momentum, Pan said.
Chen said she is confident that Taiwanese stocks will attract foreign investors again with their earnings growth. Taiwan’s manufacturers have also increasingly diversified their production base, which will help boost their competitiveness as it alleviates geopolitical concerns, she said.
Over the longer term, the firm is positive on sectors including bicycles, textiles, shoe manufacturing, machine tools and biotech.
Allianz Global Investors Taiwan manages NT$69.5 billion (US$2.15 billion) in onshore Taiwanese stock funds as of September, the most in Taiwan, according to data from the Securities Investment Trust and Consulting Association. That includes a technology fund which beat 96 percent of peers in the past year, according to Bloomberg-compiled data, with Alchip Technologies Ltd (世芯), Quanta Computer Inc (廣達) and MediaTek Inc (聯發科) among its top holdings.
Additional reporting by staff writer
CONSIDERATIONS: The NSTC instructed the park to assist laid-off workers and urge companies to use furlough programs to ease the effects of falling demand Firms in the Hsinchu Science Park (新竹科學園區), which houses major tech companies, reported laying off 496 employees last month amid weakened global demand, Hsinchu Science Park Bureau director-general Wayne Wang (王永壯) said yesterday. Wang told a news conference that 48 companies in the science park laid off employees last month, including one hard disk supplier which let go 241 employees as part of a plant closure due to falling demand. Other companies reported sporadic layoffs as they adjusted to weakening demand, he said. Wang made the remarks after local media reported the layoffs over the weekend. Although the global economy is struggling with high
DEJA VU: Echoing the probe into real-estate giant Evergrande Group, the bank is under Beijing police scrutiny after last week, telling investors it is ‘severely insolvent’ Chinese authorities said they recently opened criminal investigations into Zhongzhi Enterprise Group Co’s (中植企業) money management business, days after the embattled shadow banking giant revealed a shortfall of US$36.4 billion in its balance sheet. Police in Beijing said in a statement on WeChat that they took “criminal mandatory measures” against multiple suspects, identifying one by their last name, Xie (解). They urged investors to report cases or provide leads to the authorities, including filing complaints online. Xie Zhikun (解直錕), the group’s founder, died in 2021, but several of his relatives are executives at the company. The statement did not elaborate on what
German Chancellor Olaf Scholz and German Minister for Economic Affairs and Climate Action Robert Habeck have promised to solve investment subsidy issues for Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and Intel Corp, despite the country’s budget woes. Uncertainty over the funding to TSMC and Intel has arisen after a ruling by the German Federal Constitutional Court, which cast doubt over subsidies for construction of local semiconductor chip plants. On Nov. 15, the court ruled that the German government’s decision last year to reallocate 60 billion euros (US$65.74 billion) of unused funding from COVID-19 pandemic support measures to its Climate and Transformation Fund
NEW TREAD: The Taiwanese shoe brand paired with TSMC to turn silicon waste into a circular economy good, following its success making shoes from coffee grounds Ccilu International Inc (馳綠國際), a Taiwan-based footwear brand, has become the first company in the world to turn silicon waste from contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) into eco-friendly shoes. Last year, the global footwear industry saw the first pair of pressure-relief slippers made from recycled silicon waste by Ccilu. The brand continued to unveil follow-up collections, including sports shoes and massage slippers made from the same materials. In an interview with CNA, Ccilu CEO Wilson Hsu (許佳鳴) recalled the company’s innovation of the first pair of slippers made from silicon waste after its silicon waste treatment partner, Semisils Applied Materials