Market Overview

8 Reasons To Invest In Taiwan

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8 Reasons To Invest In Taiwan

In a report issued Thursday, Credit Suisse analysts Alexander Redman and Arun Sai went over some parts of the firm’s global emerging markets equity strategy, providing "Eight reasons to remain overweight Taiwan."

The analysts believe “Taiwan's 26-month outperformance of emerging market  equities (27% in US dollar terms since mid-April 2013) has further momentum” and therefore reiterate their 15 percent overweight position relative to the iShares MSCI Emerging Markets Indx (ETF) (NYSE: EEM).

The firm overweights Taiwanese equities in account of the following key reasons:

  • The strong external position supports further sturdiness of the Taiwanese dollar.
  • “Easy monetary policy serves to promote” equities' appeal relative to bonds.
  • Exports should recover in line with Credit Suisse’s anticipated acceleration in US ISM, the analysts think.
  • Especially stable and benign GDP growth prospects benefit the market.
  • Employment and consumption indicators maintain solid positive momentum.
  • Wider margins allow Taiwanese value creation and profitability to surpass that of global emerging markets.
  • In average, emerging market equity funds have a deep under-exposure to Taiwan.
  • “Relative earnings and free cash flow based valuations seem cheap versus history.”

The Names

Credit Suisse screens for Taiwanese companies expected to deliver EPS growth above the emerging market sector peers in 2015. Their list includes the following stocks, all Outperform rated.

  • Hon Hai Precision Industry Co., Ltd. (TPE:2317) (OTC: HNHPF)
  • Nanya Plastics
  • Formosa Plastics Corporation (TPE:1301)
  • Largan Precision Co., Ltd. (TPE:3008)
  • Chinatrust Financial (OTC:CTFHF)
  • Catcher Technology Co., Ltd. (TPE:2474)
  • Compal Electronics, Inc. (TPE:2324)
  • China Life Insurance Company, Ltd. (TPE:2823) (NYSE: LFC)

 

Related Articles (EEM + LFC)

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