The outlook for Taiwan's downstream electronics hardware companies, retail consumer stocks, and financial sector is bullish over the next six to 12 months, said Jenny Lai, head of the research department at HSBC Securities (Taiwan) Co., at a press conference.
Lai projected that with the political situation in the country now stable after the recent elections, the government might expedite the policy of allowing Chinese investment in Taiwan that could help boost the stock market.
In terms of cash flows, Lai was also optimistic that foreign capital would continue to enter the market, saying that only one third of the US$11 billion in foreign investors' net sales at local stock market in the third quarter of 2011 has returned to Taiwan.
Noting that the average earnings per share (EPS) growth rate in Asian stock markets this year is estimated at 9.9 percent, Lai said Taiwan's EPS growth rate is projected at 10 percent. However, that excludes the flat panel and DRAM sectors, she said.
Citing shares prices of businesses in Apple Inc. supply chain as an example, Lai said new technology products will play a major role in giving momentum to the stock market.
Apple has been launching new products, which has resulted in Apple suppliers outperforming on the stock market since January 2008, she said.
Although, Taiwan's stock market is currently in correctional mode, Lai said she is optimistic about its performance since the economy is expected to bottom out in the first half of 2012.
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