A European brokerage has advised investors to cut their holdings in tech stocks in Asia, and for Taiwan in particular, to maintain caution in the upstream segment of the electronics industry.
In a research note, the European brokerage said that the global electronics sector remained slow with no signs indicating the world's economy will make a significant rebound any time soon, which has kept demand slow, CNA reported.
Sentiment toward Taiwan's economy remained cautious although exports in August rose 1% from a year earlier, marking the second consecutive month exports have recorded a year-on-year increase. Still, in the first eight months of this year, Taiwan's exports fell 6.6% from a year earlier in the wake of fragile global demand.
In addition to the weak global economic fundamentals, the brokerage said, new devices introduced by international tech brands failed to boost their shipments since slow global demand has eclipsed the current cyclical uptrend.
High-tech gadgets, such as smartphones and tablet computers, have also felt the pinch of slow demand resulting from a saturated market, the brokerage said, adding that many high-tech firms admitted they cannot even accurately assess how many orders they will secure over the next four to six weeks, the brokerage said. It said that PC buyers failed to restock as many inventories in the third quarter as the market had previously anticipated, which has dampened investors' confidence in the high-tech industry, the brokerage said.
Although the fourth quarter is a traditional peak season for many segments in the high-tech industry, under such unfavorable economic circumstances, uncertainty over the upcoming quarter has been on the rise, the brokerage added. The brokerage said that investors had better lock in the gains recently posted by these high-tech stocks and adjust their investment portfolios in a bid to avoid possible losses suffered by the high-tech industry.
Under Taiwanese regulations, the names of foreign brokerages cannot be reported when they give price forecasts for specific stocks.
