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Time to refocus on non-tech stocks in Taiwan: Morgan Stanley

Time to refocus on non-tech stocks in Taiwan: Morgan Stanley

Taipei, April 30 (CNA) U.S.-based brokerage firm Morgan Stanley suggested Thursday that investors should shift their focus on Taiwan-listed stocks to non-tech sectors, as a strong Taiwanese currency is likely to affect earnings of tech companies. Terence Cheng, a Taipei-based analyst at Morgan Stanley, said the brokerage has noticed that China and tech demand are fundamental swing factors that need to be monitored in the Taiwan Stock Exchange weighted index. Also, the Taiwan dollar appreciated by less than 2 percent between March 31 and April 28, indicating potential foreign exchange losses in the second quarter, especially for Taiwanese tech companies, Cheng said. Although foreign exchange gains or losses are evaluated using quarter-end exchange rates and there are still two months to go in the second quarter, first-quarter results reported by Taiwanese tech companies so far have pointed to a negative impact from the strong Taiwan dollar, he added. "Therefore, if the Taiwan dollar strength persists, foreign exchange might be another negative factor for tech earnings," Cheng wrote in a note to clients. Citing an earlier Morgan Stanley analysis of the impact of Taiwan dollar appreciation against the U.S. dollar on the earnings of Taiwanese companies, Cheng said the brokerage's strategy is to shift focus to non-tech stocks. "It is apparent that non-tech companies such as autos, materials and consumer stocks should fare better than tech companies," he said. "We maintain our balanced portfolio approach, but would be selective on tech because there might be some near-term pressure on year-to-date outperformers." (By Jeffrey Wu)


Updated : 2021-09-21 21:34 GMT+08:00