Stock market to rebound in the second half: UBS


By John Liu, The China Post

TAIPEI, Taiwan — Low interest rates and a booming electronics sector in the latter half of the year are likely to drive the Taiwan stock market index to the 10,000-point mark, said William Dong (�����d), equities and research head of UBS Securities’ Taipei branch. The securities head made the comment at the annual UBS Taiwan Conference yesterday.

Dong provided two reasons that the stock market will bounce back. The first one is local stocks’ relatively higher yields. Dong said low interest rates and consequently easy access to money around the world will drive an inflow of capital in search of higher returns. The second factor is that the electronics sector will enter its high season in the second half of the year. The export momentum, although not as strong as last year, is still promising, according to Dong. In addition to fundamentals, capital flow also plays a critical role in stock performance, Dong cautioned, adding that the latter is more unpredictable. Uncertainty in the

Fourth Quarter Dong forecast the rebound will occur in the third quarter this year. However, there will be more uncertainty in the fourth quarter, and there are also two factors that may have adverse impact on the local stock market as well. One is the public’s anticipation that the U.S. Fed will raise interest rates in the third quarter, and therefore reduce money supply in the capital market.

The other uncertainty is the presidential election that will take place on Jan. 16, 2016. Greater fluctuation is expected in the market as election nears, Dong said. In regards to the investment approach, Dong suggested a balanced investment strategy, or raising stakes in technology and telecommunication concept stocks, while focusing on the Apple supply chain and high-dividend stocks in the latter half of the year. This will supposedly reap higher and more stable returns.

Greece’s debt crisis has affected stock markets around the world. If Greece cannot resolve the problem at the end of month, it will continue to affect global stock markets, Dong said. Taiwan to See 3.3-percent

GDP Growth UBS Securities forecast that Taiwan will see 3.3-percent GDP growth in 2015, down from 3.7 percent in 2014.

UBS contributed the slower growth to falling export prices, delayed profitability for technological products, and emerging markets’ economic slowdown. They hurt Taiwan’s PC shipments, semiconductor inventory adjustment and the mobile phone market in mainland China, Dong said. As the economy slowed, the stock market underperformed in the first half of 2015, UBS Securities noted. UBS analyst Arthur Hsieh (�©v��) said distributors of electronics hardware have started stocking inventory in preparation for higher demand. The arrival of Windows 10 is expected to boost demand too. Taiwanese firms hold the edge in cellphone shells, cameras and touch devices. With high entry barriers, Chinese competitors are not too much of a concern right now, Hsieh said.