Taiwan stocks near record thanks to foreign money


Optimism over the economy’s leading semiconductor industry helped the Taiex rise from its August low
Newsfeed19 Sep 2019
Photo credit: AFP Photo


Market news selected by the DBS Chief Investment Office

 

REST OF ASIA

Foreign investors have piled into Taiwan markets this month, leaving its stocks tantalisingly close to a record.

The Taiwan Stock Exchange Weighted Index (Taiex) is unlikely to reach it, however, because of the trade war and how many companies’ fortunes are linked to Apple Inc’s latest iPhone. Analysts predict the benchmark gauge will end the year just 2.5% higher at 11,200 – a whisker shy of the record reached last year.

Global investors have flocked to Taiwan equities so far in September, with USD2.3b of inflows the most among 10 Asian markets tracked by Bloomberg. Optimism over the economy’s dominant semiconductor industry helped the Taiex rise 5.8% from its August low, while the local dollar saw its longest rally in three years.

Taiex companies’ earnings growth is expected to drop 6.7% this year, the most since 2015, according to Bloomberg-compiled data. 

Analysts said last week (ended 13 September) that Apple is seeing “weak” pre-orders for the new iPhone, citing conversations it had with retailers. Demand could also be low in China, where 5G phones are in focus, they added. Greater China, including the mainland, accounted for almost 20% of Apple’s revenue last year, Bloomberg-compiled data show.

Any disappointing iPhone sales would be a big headwind for the Taiex. That is because Apple suppliers Taiwan Semiconductor Manufacturing Co Ltd, Largan Precision Co Ltd, and Nanya Technology Corporation accounted for 35% of the benchmark’s recent rally.

Meantime, investors got a reminder of the impact that the US-China dispute and other issues are having on the global economy on Tuesday, when World Bank President David Malpass called the slowdown “broad-based”. Chinese trade negotiators are set to travel to Washington for the latest round of talks in October. – Bloomberg News.

The Taiex gained 0.51% to 10,929.45 on Wednesday.

Australia’s S&P/ASX 200 Index gained 0.29% to 6,701.30 at the open on Thursday. It dropped 0.20% to 6,681.59 the previous session.

South Korea’s Kospi Index increased 0.51% to 2,081.34 early Thursday. It upped 0.41% to 2,070.73 the previous session.

 

MAINLAND CHINA & HONG KONG

Huawei Technologies Co Ltd is offering up its most valuable 5G secrets and USD1.5b to software developers, courting the global tech community at a time the US is heightening scrutiny of the Chinese giant.

China’s largest technology company aims to ramp up investment in its developer programme over the next five years, Deputy Chairman Ken Hu told attendees at an annual conference. That effort is gaining urgency with Huawei in danger of losing access to American circuity and code, including the Google software it needs to run the world’s second-largest mobile device business.

Huawei is accelerating its outreach after the Trump administration imposed sanctions on the sale of US technology, encouraging allies to cut ties with a Chinese company it accuses of aiding Beijing in espionage. In response, Huawei offered to sell a license to its vaunted fifth-generation wireless technology – needed to drive future modern economies – to create a viable competitor and prove its gear is free of security loopholes.

China’s perceived lead in 5G is at the heart of US President Donald Trump’s campaign to contain the country’s rise. Already, Huawei has inked more than 60 commercial contracts to build the wireless standard globally. China itself is ready to finish the first phase of its 5G rollout by the 2H20.

Huawei executives turned out in force in the country’s financial capital Wednesday (18 September), roping in foreign executives to showcase the technology giant’s road map for dominating future technologies. It is developing alternatives to US technology to help safeguard the world’s largest networking business. Part of that involves ensuring a thriving community of partners. Huawei established a developer programme to encourage external parties to create apps for Huawei services, including its just-unveiled in-house smartphone platform, HarmonyOS. The company intends to build its base of partner-developers to 5m eventually.

Huawei’s rapid advances have, however, raised hackles in Washington, for which the Chinese company symbolises a geopolitical rival’s growing technological might. Executives sought to tamp down those fears. Huawei would be willing to open its technology vaults for a fee, to help another company catch up on a technology that will drive applications from smart homes to self-driving cars. – Bloomberg News.

The Shanghai Composite Index jumped 0.25% to 2,985.66 on Wednesday and the Hang Seng Index fell 0.13% to 26,754.12.


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