For­eign bro­ker­age cuts TAIEX tar­get af­ter Q2 data

The China Post - - BUSINESS -

Dis­ap­pointed by Tai­wan’s lower-than-ex­pected gross do­mes­tic prod­uct growth for the sec­ond quar­ter of this year, a Euro­pean bro­ker­age has sharply cut its tar­get for the Tai­wan Stock Ex­change Cap­i­tal­iza­tion Weighted Stock In­dex (TAIEX) on the main board.

The bro­ker­age, which asked not to be named, has trimmed its tar­get for the weighted in­dex to 9,180 points from an ear­lier fore- cast of 9,900 points, cit­ing con­cerns over out­bound ship­ments of the bell­wether elec­tron­ics sec­tor.

On Fri­day, the Di­rec­torate Gen­eral of Bud­get, Ac­count­ing and Sta­tis­tics (DGBAS) re­ported that Tai­wan’s GDP rose only 0.64 per­cent, lag­ging far be­hind the DGBAS’s ear­lier es­ti­mate of a 3.05 per­cent.

The gov­ern­ment agency said that the dis­ap­point­ing sec­ond quar­ter GDP growth largely re- sulted from worse-than-ex­pected ex­ports at a time when global de­mand re­mained weak. In the April-June pe­riod, Tai­wan’s mer­chan­dise and ser­vice ex­ports fell 1.30 per­cent from a year ear­lier, com­pared with an ear­lier forecast of 3.27 per­cent growth.

The weighted in­dex on the Tai­wan Stock Ex­change closed down 0.16 per­cent to 8,665.34 points Fri­day af­ter bar­gain hunt­ing in the late trad­ing ses­sion lifted se- lect large-cap stocks, help­ing the in­dex re­coup ear­lier losses, deal­ers said.

De­spite the small gains in share prices in the latest ses­sion, sen­ti­ment to­ward the econ­omy re­mained cau­tious in the wake of the sec­ond quar­ter GDP data, they said.

The bro­ker­age said that the bot­tom line of the elec­tron­ics sec­tor could be eroded this year due to pro­longed in­ven­tory ad­just­ments, and such weak­ness in prof­itabil­ity could con­tinue into next year.

A move by U.S. con­sumer elec­tron­ics gi­ant Ap­ple Inc., which places large or­ders to its Tai­wanese sup­pli­ers, to give a low­erthan-ex­pected guid­ance for the three months to Septem­ber bodes ill for Tai­wan’s out­bound ship­ments in the quar­ter, the bro­ker­age said.

In an in­vestor con­fer­ence held in July, Ap­ple forecast that its sales for the cur­rent quar­ter will range be­tween US$49 bil­lion and US$51 bil­lion, miss­ing an ear­lier mar­ket forecast of US$51.1 bil­lion.

The bro­ker­age said that fears have es­ca­lated that global de­mand in the fourth quar­ter and even in the first quar­ter of next year will also dis­ap­point the mar­ket and shares in Tai­wan could face down­side risks.

While it has cut the TAIEX tar- get, the bro­ker­age has picked five stocks for in­vestors to in­vest in due to ei­ther their sound fun­da­men­tals or at­trac­tive val­u­a­tions.

The five are food maker UniPres­i­dent En­ter­prises Corp., tele­com op­er­a­tor Far EasTone Telecom­mu­ni­ca­tions Co., con­tract chip maker Tai­wan Semi­con­duc­tor Man­u­fac­tur­ing Co., me­tal casing sup­plier Catcher Tech­nol­ogy Co., and E. Sun Fi­nan­cial Hold­ing Co.

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