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Apple-Inspired Rally in Taiwan Stocks Seen Faltering on Earnings

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Carlo Prine
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The biggest rally in Taiwan stocks in eight months will peter out as slowing earnings and uncertainty over relations with China counter speculation about demand for Apple Inc. s newest iPhone.The benchmark Taiex Index will end the year at 8,650, or 3 percent higher than Thursday s close, according to the median estimate of fund managers and analysts in a Bloomberg survey.

A big risk is whether China will take any actions in response to Tsai s cross-strait policy.

Foreign investors have pulled a net $2.1 billion from Taiwan equities this quarter, the most among eight Asian markets tracked by Bloomberg, as Apple reported its first-quarter sales drop in 13 years.

The Taiex Index climbed 0.8 percent to 8,463.61 at the close on Friday, capping a weekly advance of 4.1 percent.Tsai s reluctance to endorse the one-nation principle with China appears to have irked the Communist Party, with the official Xinhua News Agency saying this week the island s first female president is emotional and extreme because she isn t married.With smartphone sales slowing globally, five out of six respondents expect earnings by listed companies to drop this year.

Exports account for about two-thirds of Taiwan s gross domestic product, with electrical equipment and machinery comprising half of all outbound shipments.There are signs companies are finding ways to innovate.

Higher interest rates make dollar assets more attractive than emerging-market securities.

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Carlo Prine
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