A European brokerage has projected that the Taiwan Capitalization Weighted Stock Index (TAIEX) will rise to 9,700 points next year, as listed companies will see an improvement in their bottom lines amid a domestic and global economic recovery.
In a recent research note, the foreign brokerage said it prefers high-tech stocks over non-high tech stock as the high-tech sector is expected to post a 19 percent annual increase in profits for 2017, compared with an expected rise of about 6 percent in the non-high tech sector.
On Friday, the weighted index on the local main board rose 0.18 percent to 9,392.68 points. Since the beginning of the year, the weighted index has gained 12.65 percent on the back of strong foreign institutional buying in large-cap stocks such as contract chip maker Taiwan Semiconductor Manufacturing Co. (TSMC, ???), the most heavily weighted stock on the local market.
In its forecast, the European brokerage said the local equity market is expected to climb even higher, challenging 9,700 points next year as investments continue in profitable stocks, including TSMC.
CNA cannot identify the brokerage because media outlets in Taiwan are not allowed to report the name of a foreign brokerage when it gives forecasts for specific stocks.
The brokerage said its forecast of double digit growth in high-tech sector profits was based on a relatively low comparison base in 2016.
In addition, "Apple concept stocks" will continue to benefit from the U.S. consumer electronics giant's launch of new gadgets next year, the brokerage said.
TSMC, which supplies processors for Apple's iPhones, is one of the 15 stocks the brokerage has recommended this year based on its solid gains so far. Since the beginning of the year, shares of TSMC, in which foreign institutional investors hold an almost 80 percent stake, have gained about 30 percent.
The European brokerage has also recommended Largan Precision Co. (???), a smartphone camera lens supplier to Apple; Hon Hai Precision Industry Co. (??), an assembler of iPhones and iPads; Foxconn Technology Co. (??), a metal casing maker for Apple; flat panel producer Innolux Corp. (??); integrated circuit packaging and testing firm Powertech Technology Inc. (??); contract notebook computer maker Inventec Corp. (???); and industrial computer supplier Advantech Co.(??).
In the non-tech sector, the brokerage has picked Cathay Financial Holding Co. (???), Yuanta Financial Holding Co. (???), Mega Financial Holding Co. (???), telecom operator Far EasToneTelecommunications Co. (??), EVA Airways Corp. (???), food maker Uni-President Enterprises Corp. (??) and widow curtain supplier Nien Made Enterprise Co. (??).
Source: Focus Taiwan News Channel