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TAIEX forecast to challenge 11,650 points by end of 2018

2018/01/13 19:57:45

Taipei, Jan. 13 (CNA) An Asian brokerage expects the Taiwan Stock Exchange Capitalization Weighted Stock Index (TAIEX) to challenge 11,650 points by the end of 2018 on the back of an improvement in the profitability of companies listed on the main board.

In a research note, the Asian brokerage said it has raised its forecast for the weighted index to 11,650 points for 2018 from an earlier estimate of 11,300 points.

The foreign securities house said the upgrade came in the wake of an anticipated increase of 10 percent in average earnings per share for companies listed on the main board in 2018, following an expected 10 percent increase in 2017.

The EPS growth rate on the main board for 2019 is expected to hit 8 percent, the brokerage said.

In 2017, the weighted index on the TWSE rose 15.01 percent to end at 10,642.86 points, marking the second year the market has posted gains, with foreign institutional investors registering net buying of NT$155.23 billion (US$5.24 billion) for the year.

In the year, the bellwether electronics sector gained 19.4 percent from a year earlier, ahead of a 10.7 percent increase posted by the financial sector and a 9.7 percent rise recorded by the old economy sector.

Since the beginning of this year, the main board has gained 2.27 percent. On Friday, the weighted index staged a technical rebound from a retreat seen in the previous two sessions, up 0.68 percent, at 10,883.96.

The brokerage said it remains upbeat about the local high-tech and financial sectors for 2018.

For the electronics sector, the brokerage expects corporate earnings to be boosted by solid demand for semiconductors, which will be driven by an increase in orders placed by PC and smartphone vendors along with a wide range of other applications, such as automotive electronics, the Internet of Things, data centers and virtual currencies.

In addition, rising demand for production automation is also expected to pave the path for higher profitability in the high tech sector, the brokerage said.

The securities house said the local financial sector is expected to benefit from the development of private banking, while tighter monetary policies in the global market to boost interest rates could boost returns on financial firms' overseas investments.

The Asian brokerage has picked 16 stocks in its buy list for 2018. These include contract chipmaker Taiwan Semiconductor Manufacturing Co., iPhone assembler Hon Hai Precision Industry Co., memory chip maker Nan Ya Technology Corp. and integrated circuit packaging and test firm Advanced Engineering Inc.

Also on the buy list are CTBC Financial Holding Co. E. Sun Financial Holding Co. and Aerospace Industrial Development Corp., according to the brokerage.

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 Jeffery Wu and Frances Huang)