Taiwan corporate earnings to grow in 2014, 2015: Merrill Lynch
Central News Agency
2014-01-12 05:09 PM
Taipei, Jan. 12 (CNA) Taiwanese companies will see their earnings increase this year and next year, according to research released by Bank of America Merrill Lynch. The U.S. bank forecast that Taiwan's overall corporate earnings will grow 18 percent in 2014 and 10 percent in 2015, with a dividend yield ratio of 3.5 percent. "The macro outlook has been unexciting in Taiwan, but we expect companies under our coverage to continue to see double-digit earnings growth," said Katherine Hu, a Taipei-based equity strategist at Merrill Lynch. The discrepancy, she explained, occurs because most exporters' earnings and production are generated outside Taiwan and do not translate into domestic wage increases to help growth in consumption in Taiwan. On individual sectors, Hu said she expects another strong year in 2014 for Taiwan's semiconductor industry, while Apple Inc.'s supply chain moves away from South Korea -- which means that Apple's expansion of product lines will benefit its Taiwanese suppliers. Moreover, a further opening up of local financial and wealth management products in 2014 is likely to generate higher earnings for banks and brokers, with margins in the chemical industry also expected to rise moderately this year, Hu predicted. Taiwan's airlines are also forecast to benefit from the recovery of cargo shipments, led by the United States, and local cement demand and supply might continue to improve, she said. As a result, the analyst gave an "overweight" rating on semiconductors, banks, brokers, cement and airline sectors, while holding a more negative view on personal computers, notebooks and telecom stocks. Tony Phoo, a Taipei-based economist at Standard Chartered Bank, said in a Jan. 8 report that the increases in Taiwan's imports of capital goods and raw materials in December reflects improving confidence in the manufacturing sector. That will provide strong support to the country's economic growth in 2014, despite slowing exports of electronic components and information and communication products, Phoo said. (By Jeffrey Wu)
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