High-tech stocks could lead re­bound in stock mar­ket: an­a­lysts

The China Post - - LOCAL -

High-tech stocks are ex­pected to ben­e­fit from peak sea­son ef­fects in the sec­ond half of the year and help Tai­wan’s stock mar­ket stage a re­bound af­ter a re­cent slump, mar­ket an­a­lysts said Satur­day.

Chen Po-chen ( ), man­ager of the Man­ulife Tai­wan High Div­i­dend Fund (

), said the bell­wether elec­tron­ics sec­tor should en­ter a cycli­cal up­swing in the sec­ond half of the year af­ter in­ven­tory ad­just­ments in the first half.

The an­tic­i­pated

re­cov­ery

in sales should give in­vestors a strong in­cen­tive to take ad­van­tage of the rel­a­tively low val­u­a­tions of elec­tron­ics shares af­ter a re­cent sell-off and prop up their prices, Chen said.

Since edg­ing close to the 10,000-point mark in late April, the Tai­wan stock ex­change’s weighted in­dex has fallen 7.5 per­cent and closed at 9,218.37 on Thurs­day as for­eign in­sti­tu­tional in­vestors con­tin­ued to pull out of the mar­ket.

The ex­change was closed on Fri­day for a public hol­i­day.

In par­tic­u­lar, Chen

said, Ap­ple Inc. is likely to un­veil its next gen­er­a­tion iPhone in Au­gust and the new de­vices could go on sale glob­ally in Septem­ber, which means Tai­wanese sup­pli­ers of Ap­ple could reap­pear in the mar­ket spotlight start­ing in July.

Hon Hai Pre­ci­sion In­dus­try Co. ( ), an as­sem­bler of iPhones and iPads, and Lar­gan Pre­ci­sion Co. ( ), which sup­plies smart­phone cam­era lenses to Ap­ple, are ex­pected to ben­e­fit from an in­crease of or­ders placed by Ap­ple Inc. in the sec­ond half of the year.

At the same time, bloated semi­con­duc­tor in­ven­to­ries have be­gun to fall grad­u­ally and should reach nor­mal lev­els in mid-Au­gust, af­ter which or­ders could be­gin to stream in again, Chen said.

The trend could at­tract bar­gain hun­ters to chip stocks.

Lee Meng-hsia ( ), man­ager of the Yuanta/P-shares Tai­wan GreTai 50 ETF Fund (

50 ), said liq­uid­ity lev­els are ex­pected to re­main high and push share prices higher be­cause the U.S. Fed­eral Re­serve has showed signs of main­tain­ing a rel­a­tively loose mon­e­tary pol­icy.

Af­ter con­clud­ing the latest two- day pol­i­cy­mak­ing meet­ing Wed­nes­day, Fed Chair Janet Yellen said the mar­ket should fo­cus on the pace and tra­jec­tory of in­ter­est rate in­creases rather than the tim­ing of the ini­tial hike, which led in­vestors to think that the Fed would raise in­ter­est rates grad­u­ally.

Lee said that since the be­gin­ning of June, elec­tron­ics and semi­con­duc­tor stocks in Tai­wan’s over- the- counter mar­ket have fallen about 7 per­cent, paving the path for a re­bound amid high liq­uid­ity.

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