Taipei, An Asian brokerage has left unchanged its target of 11,650 points for the benchmark weighted index on the Taiwan Stock Exchange, or the Taiex, for 2018, despite the fact that the main board has seen massive foreign institutional selling so far this year.
In a research note, the Asian securities house said the Taiwan market still benefits from the strength of the country's bellwether electronics market so it remains upbeat about the market's outlook.
On Friday, the Taiex closed up 0.14 percent at 10,529.37, but despite the moderate gains, foreign institutional investors stood on the sell side, registering net sales of NT$3.29 billion (US$111 million) worth of shares on the main board.
Since the beginning of this year, foreign institutional investors have made net sales of NT$170.67 billion worth in local equities, eroding net buying of NT$155.2 billion for all 2017.
Due to the massive foreign institutional selling, the local main board gave up earlier gains seen this year and has fallen 1.07 percent since the end of 2017.
However, the Asian brokerage is not deterred by the foreign sell-off, and is maintaining its Taiex target for 2018.
CNA cannot identify the brokerage, because media outlets in Taiwan are not allowed to report the names of foreign brokerages when they give price-moving forecasts for specific stocks or for the entire market.
The brokerage said the recent slowdown in the local equity market reflects slow season effects in the first quarter for the electronics sector, but the high tech sector remains promising down the road, in particular the semiconductor industry.
The securities house said the semiconductor industry is expected to benefit from developments in a wide range of applications, such as automotive electronics, industrial electronics, the Internet of Things, data centers, PCs and mobile devices.
In addition, the securities house is also optimistic about server and industrial automation equipment developers in Taiwan, while the financial industry is riding a wave of growth.
The brokerage said the electronics and financial sectors are expected to outperform the broader market, forecasting that average earnings per share on the main board will rise 7 percent in 2018, 6 percent in 2019, and 9 percent in 2020.
Among the tech stocks favored by the brokerage are contract chipmaker Taiwan Semiconductor Manufacturing Co., iPhone assembler Hon Hai Precision Industry Co. integrated circuit designer MediaTek Inc., memory chip supplier Nanya Technology Corp., silicon wafer maker GlobalWafers Co., and industrial computer developer Ennoconn Corp.
The brokerage has issued an "outperform" rating on these tech stocks.
Source: Focus Taiwan News Channel