Asian brokerage leaves TAIEX 2017 target of 10,800 points unchanged

2017/10/09 18:50:48
CNA file photo

CNA file photo

Taipei, Oct. 9 (CNA) An Asian brokerage has left unchanged a forecast that the Taiwan Capitalization Weighted Stock Index will hit 10,800 points this year on the back of the local electronics sector, even though foreign institutional investors sold a net more-than NT$62 billion (US$2 billion)-worth of shares on the main board in September.

In addition, the weighted index on the main board is expected to challenge 11,300 points next year as an improving bottom line of the high- tech sector will further boost share prices, the brokerage said.

In a research note, the brokerage said it remains upbeat about Taiwan's high-tech sector and expects it to keep pushing up the broader market for the rest of the year, while leaving recent foreign institutional selling behind.

The brokerage said the earnings per share of the local electronics sector is expected to rise 14 percent in 2017 and an additional 13 percent in 2018, outpacing a 10.5 percent increase in 2017 and a 9.5 percent rise in 2018 expected for the listed companies in Taiwan overall.

While foreign institutional investors sold local equities on a larger scale in September than the previous month, locking in their earlier gains, the brokerage said an uptrend in the local bourse remains intact.

In September, foreign institutional investors sold a net NT$62.03 billion-worth of shares on the main board after a net sell of NT$6.40 billion in August.

The main board has continued its strength to stand above the 10,000-point level for more than four months, the longest run in which the market has remained above that level in the local equity market's history.

On Friday, the weighted index on the Taiwan Stock Exchange closed up 14.54 points, or 0.14 percent, at 10,532.81. The market was closed Monday and will remain closed Tuesday for the Oct. 10 National Day holiday.

So far this year, the main board has gained almost 1,300 points, or about 13.83 percent, largely on the back of buying by foreign institutional investors who have rushed to pick up large-cap stocks such as contract chipmaker Taiwan Semiconductor Manufacturing Co. (台積電), the most heavily weighted stock in the local market.

In the high-tech sector, the brokerage said it has higher expectations about Taiwan's semiconductor industry in particular, adding that Taiwanese integrated circuit firms could continue from the launch of the new iPhones, rising global demand for production automation and booming automotive applications.

The brokerage urged investors to pick up shares in TSMC, iPhone assembler Hon Hai Precision Industry Co. (鴻海), IC packaging and testing firms Advanced Engineering Inc. (日月光) and King Yuan Electronics Co. (京元電), and contract notebook computer maker Inventec Corp. (英業達)

CNA cannot identify the brokerage because media outlets in Taiwan are not allowed to report the names of foreign brokerages when they give price forecasts for specific stocks and fluctuations in the index.

(By Jeffrey Wu and Frances Huang)
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