Local stock market to surpass the 9,200 mark in H2: analysts
By John Liu, The China Post
May 28, 2014, 12:01 am TWN
TAIPEI, Taiwan -- Thanks to global economic recovery, the stock market in Taiwan is expected to reach 9,200 points in the second half of the year, Capital Securities Corporation (群益金鼎證券) said.
Capital Securities held a conference yesterday to discuss Taiwan's investment environment in the second half of the year. According to the securities firm, the U.S. is expected to lead the worldwide economic recovery.
So far this year the U.S.' nonagricultural workforce has grown by more than 200,000 people per month. Adding the agricultural workforce, the labor force has returned to levels from before the 2008 financial crisis. The strong labor market will provide the momentum for economic recovery in the U.S., said Capital Securities President Alex Wang (王濬智).
The recovery is expected to pull Europe out of its current economic quagmire, Capital Securities said, adding that emerging economies that rely heavily on exports are also expected to benefit from the recovery.
Good Time to Purchase US Stocks
While the U.S. Fed is set to taper off quantitative easing (QE), there will be less capital flowing around in global financial markets. The U.S. is expected to raise interest rates, and the performance of financial markets around the world is likely to reflect this new reality in the second half of the year, the securities firm said.
Capital Securities forecast overflowing capital returning to the U.S. over the course of the year, and therefore recommends investors to purchase stocks of companies whose products have a strong showing in the U.S. market. By placing purchases while prices are still low, investors will be able to taste the sweet fruit of U.S. recovery, Capital Securities said.
Local Technology Firms
a Good Bet
Capital Securities expects the local stock market to benefit from the U.S. recovery as well. In regards to picking domestic stock, the securities firm said technology firms hold the best opportunity for growth. Global name brands are expected to roll out new mobile devices in the second half of the year, which are likely to benefit businesses in the related supply chain.
With an average 14-percent profit growth and a P/E ratio of 20 realized by companies so far this year, Capital Securities concluded that the stock market is bound to reach 9,200 points in the second half of the year. It recommends holding a large portion of electronics stock in an investment portfolio, supplemented by non-technology and financial stocks.
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