Taiwan’s benchmark stock index may fall 15 percent this year as a move by Beijing to allow its currency to rise hurts the competitiveness of the nation’s manufacturers in China, CLSA Asia-Pacific Markets said.
The TAIEX may drop to 6,800 by the end of the year, led by technology companies and manufacturers with operations in China, said Nicholas Teo (趙長順), head of research for CLSA.
The measure slid 0.7 percent to 7,952.17 at the close in Taipei yesterday, extending the decline this year to 2.9 percent.
“Most of Taiwan’s manufacturers have production bases in China,” Teo, who became head of the research team in January, said in an interview yesterday at Bloomberg’s Taipei bureau. “That would add pressure to costs and potentially squeeze margins.”
China will allow the yuan to gain this year, all 19 analysts surveyed by Bloomberg News last month said. Twelve are forecasting a move by June 30, making it cheaper for Chinese consumers to buy foreign products and pushing up the cost of the country’s own goods on international markets. China has left the yuan pegged at about 6.83 per US dollar since July 2008.
CLSA Asia-Pacific Markets, third-ranked by both Asiamoney and Institutional Investor for its coverage of Taiwan, expects the yuan to rise by an annualized 5 percent to 7 percent per year, Teo said.
Compal Electronics Inc (仁寶), the world’s largest laptop maker, which plans to invest US$180 million to expand its China production site, dropped 1.5 percent to NT$43.20, the most since April 19. Hon Hai Precision Industry Co (鴻海), the world’s largest electronics maker with about 600,000 workers in China as of March last year, dropped 1 percent to NT$147.
Taiwan’s exporters may also be hurt by a strengthening of the nation’s currency, Teo said. The New Taiwan dollar may rise a further 0.7 percent to NT$31.20 by the end of the year as it lags behind other Asian currencies, he said.
The NT dollar’s 1.9 percent gain so far this year is the third-worst among the 10 most-actively traded currencies in Asia, excluding Japan.
Taiwanese consumer companies, such as retailers, will benefit most from the yuan appreciation, Teo said. He declined to name individual stocks.
The TWSE Food Index, which tracks 20 food-related companies, rose 0.5 percent, the most among 28 industry groups on the TAIEX.
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday obtained the government’s approval to inject an additional US$10.26 billion to finance the construction of its second fab in Kumamoto, Japan, and a second fab in Arizona, using advanced process technologies. The Department of Investment Review approved TSMC’s investment applications on the basis that Taiwan remains a major technology and manufacturing hub for the chipmaker, which makes its most advanced chips at home, the company operates its research-and-development center here and the majority of its capacity remains in Taiwan. The latest capital injections — US$5.26 billion for its Japanese venture Japan Advanced Semiconductor Manufacturing
Packed into a small room, a drone, bipedal robot, supermarket checkout and other devices showcase a vision of China’s software future — one where an operating system developed by national champion Huawei (華為) has replaced Windows and Android. The collection is at the Harmony Ecosystem Innovation Center in the southern city of Shenzhen, a local government-owned entity that encourages authorities, companies and hardware makers to develop software using OpenHarmony (鴻蒙), an open-source version of the operating system Huawei launched five years ago after US sanctions cut off support for Google’s Android. While Huawei’s recent strong-selling smartphone launches have been closely watched for
The waves of the Aegean Sea lap gently at the tables and chairs of two beach restaurants on Greece’s Halkidiki peninsula. It is an idyllic scene, but one that is totally illegal. Like many others in Greece, the two establishments on Pefkochori Beach do not have a license to set up shop so close to the water. After a wave of protests last summer by locals about bars and restaurants illegally covering beaches with sunbeds and tables, the Greek state is taking action. It is cracking down on rogue tourist practices with surveillance drones, satellite imagery and a special app
AI BOOM: With many stocks trading at historically high levels, the TAIEX is expected to drop about 600 points in the third quarter as investors seek to pocket their profits Taiwan’s main board could experience a technical pullback after the TAIEX soared more than 28 percent in the first half of this year following a strong showing by artificial intelligence (AI)-related stocks, analysts said on Saturday, predicting that the index would make a comeback in the fourth quarter. On Friday, the last trading session of this month, the TAIEX rose 126.27 points, or 0.55 percent, to 23,032.25, pushing up the main board by 5,101.44 points, or 28.4 percent, in the first six months of the year. Of the major indices in the world, the TAIEX only trailed the Philadelphia Semiconductor Index