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Credit Suisse lowers Taiex target on earnings revision

Credit Suisse lowers Taiex target on earnings revision

Taipei, Sept. 7 (CNA) Swiss bank Credit Suisse Group AG on Monday lowered its year-end forecast for the Taiwan stock exchange's benchmark index, the Taiex, from 10,000 to 8,500 points to reflect lower earnings projections by local companies.
With lower earnings forecasts spreading from tech to non-tech sectors, due in part to slower growth in China, there is an increasing possibility that earnings on the Taiwan market would decline in 2016, after recording cumulative growth of more than 80 percent over the past three years, the bank said.
"Meanwhile, we believe tech earnings are likely to see some relief in the fourth quarter of 2015, driven strongly by the currency tailwind," said Chung Hsu, a Taiwan market strategist at Credit Suisse.
"However, we expect non-tech earnings to come under pressure, with petrochemical companies suffering more inventory losses as a result of a further drop in oil prices," Hsu wrote in a research note. He projected that the material sectors will also be affected by weak demand from China and that financials will face headwinds as a result of a weaker capital market.
Taiwan's tech sector is likely to fare better than the non-tech industry going into the end of the year because of a favorable foreign exchange rate since the end of the second quarter, PC inventory re-stocking in the second half of the year and the launch of the iPhone 6S late in the third quarter, Hsu said.
As a result, Taiwan's tech earnings are likely to grow 9.8 percent in 2016, while non-tech earnings, including financials, are expected to drop 6.6 percent, he said.
As of 10:45 a.m. Monday, the Taiex had fallen 0.37 percent to 7,970.97 points. (By Jeffrey Wu)


Updated : 2021-09-26 04:52 GMT+08:00