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June 23, 2017

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Taiwan's broader market has limited room to rise in short term: analysts

TAIPEI -- After the weighted index on the Taiwan Stock Exchange did well to close above the 9,000-point mark last week, the broader market has limited room for a further rise in the short term, market analysts said Monday.

But because the market remains awash in liquidity and the economy seems to be improving, select individual stocks are expected to continue to grow on positive leads, they said. Among the potential movers are "Apple concept stocks" — the shares of suppliers to the U.S. consumer electronics giant — analysts said.

On Friday, the stock exchange's benchmark index fell for the second consecutive session, closing down 0.36 percent at the day's low of 9,075.91, as investors rushed to pocket gains after the index breached 9,100 points on May 28.

Still, the index was able to remain above the 9,000-point mark, a level it had not hit in nearly three years, and it was up 3.24 percent in May as of Friday. It was closed Monday for a public holiday.

Shi Sheng-yuan, a manager of the Jih Sun High-Tech Fund, said that as the broader market has gained significantly in recent sessions, its upside could be capped, and he expected the index to move in a narrow range.

But Shi said that with Apple expected to launch the next generation iPhone later this year, the so-called Apple concept stocks could continue to benefit from strong liquidity in the market on hopes that their shipments will get a boost from the new devices.

In a recent research note, Macquarie Securities said Catcher Technology Co., a metal casing supplier to Apple, is expected to enjoy a more than 20 percent sequential increase in consolidated sales in the second half of the year on the back of new iPhone production.

Macquarie raised its target price for Catcher shares to NT$361.00 from 328.00 amid optimism over the company's profitability, while maintaining an "outperform" rating on the stock.

On Friday, shares of Catcher fell 3.25 percent to close at NT$268.00 as investors locked in their recent gains.

Shen Wan-jun, a manager with the Capital OTC Fund, said that in addition to local suppliers to Apple, he was upbeat about semiconductor, LED and solar energy stocks because the global economy is on the way to recovery.

Shen said the index could consolidate, and investors should pay more attention to individual stocks than to the fluctuations in the broader market for the moment.

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