Taipei, The weighted index on the Taiwan Stock Exchange is expected to hit 11,980 points in the second half of this year on the back of a peak season enjoyed by the bellwether electronics sector, according to Fuh Hwa Securities Investment Trust Co.
An improvement in the profitability of high tech firms in the second half of the year is expected to lead equity investors to park their funds in the local equity market, although many investors remain concerned about trade friction between the United States and China, as well as fund outflows from the region, the advisory firm said.
On Friday, the Taiex ended down 3.24 points, or 0.03 percent, at 10,608.57, after moving between 10,523.58 and 10,665.72, on turnover of NT$158.77 billion (US$5.20 billion).
In line with the global financial market, the local equity market fell into consolidation mode, giving up its earlier gains amid rising fears over the trade friction between Washington and Beijing.
So far this year, the Taiex has fallen 0.32 percent after foreign institutional investors registered a net sell of about NT$260 billion- worth of shares on the local main board.
However, Fuh Hwa said the average earnings growth of listed companies in the local equity market could range 6 percent-8 percent this year and profit growth momentum could appear more obvious in the second half of the year, in particular for the high tech sector, at a time of a peak season and a wider range of new technology applications.
Chou Chi-hsien (???), manager of the Fuh Hwa Digital Economy Fund, said the electronics sector, which accounts for more than 60 percent of the daily turnover in the local equity market, is expected to remain the major target for investors over the next six months.
Chou said he favors the segments that have benefited from rising product prices, such as the silicon wafer and memory chip businesses, while developers of new technologies, including automotive electronics, 3D sensors, 5G and Internet of Things, are expected to attract buying interest from equity investors. In addition, Taiwanese exporters are generally expected to report better profits for the second quarter, when the Taiwan dollar depreciated against the U.S. dollar in the three-month period, Chou said.
Looking ahead to the third quarter, Chou said, international brands such as Apple Inc. will launch new products, which is expected to boost Taiwanese suppliers' shipments in the second half of this year.
According to Chou, Taiwanese suppliers for Apple's iPhones accounted for 13 percent of the total profits raked in by all of the listed companies in Taiwan. Chou said new iPhones could boost these suppliers' profit momentum over the next six months.
While foreign institutional investors have been cutting their holdings in local equities, more and more Taiwanese investors are willing to raise their investments, which is expected to offset the impact resulting from foreign selling.
Source: Focus Taiwan News Channel