Yuanta Securities leaves 10,300-point target for Taiex unchanged
Yuanta Securities Investment Consulting said Wednesday that it has decided to leave a 10,300-point target for the Taiwan Stock Exchange Capitalization Weighted Stock Index (Taiex) unchanged despite recent volatility.
In an investment forum held by Yuanta, company President Vincent Chen said he expects the local equity market to climb out of the current doldrums from the third quarter, a peak season for the bellwether electronics sector.
Chen said that due to listed companies’ plans to go ex-dividend starting from late June, which has dragged down the weighted index on the main board by more than 300 points, bargain hunters are expected to return to the trading floor. He said that recent sell-offs have also paved the way for a market rebound.
After repeatedly failing to close above 10,000 points in late April, the local main board started to fall. Since late April, the weighted index has dropped more than 5.7 percent, closing at 9,397.31 Wednesday.
Chen said that market momentum is expected to pick up by the end of the third quarter, likely in late August.
He said that whether the index will stand well above the 10,000-point level after breaching that level will depend on whether investors spend their cash dividends on further investments.
Among the large-cap stocks to dole out fat cash dividends, Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock in Taiwan, will issue NT$4.5 (US$0.15) in cash dividends for each share, which will inject more than NT$100 billion into the market.
However, Yuanta cited the results of a survey it conducted as saying that earnings posted by listed companies on the main board and on the over-the-counter market could grow only 6 percent on average in 2016, down from an estimated 12 percent increase for 2015.
Meanwhile, Wang Cheng-hung), Yuanta’s chief economist, said that the momentum of Taiwan’s economic growth is expected to accelerate in the third quarter as the U.S. economy, the world’s largest, remains on the road to recovery, pushing up demand.
In addition, Wang said the paces of other major economies such as China, Europe and Japan are expected to speed up on the back of their eased monetary policies, starting from the July-September period, which could boost Taiwan’s economic fundamentals.