Taiwan’s High-Risk, High-Yield Market


Watch the video with Andrew Stotz or read a summary of the country profile on Taiwan.

Four Pillars of GDP: Driven by private consumption

Overall, the Taiwanese economy has been growing fairly slowly. Exports and investment are dragging on growth in private consumption. One positive detail is that GDP improved to slightly positive from negative GDP growth during the second quarter of 2016.

High yield, high risk

Taiwan’s expected 2017 price-to-book valuation is slightly above Asia ex-Japan, in line with a higher return-on-equity. Its forward-looking dividend yield is the highest in Asia.

#Taiwan's High-Risk, High-Yield Market

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A. Stotz Four Elements: Taiwan’s rank relative to Asia

Overall, Taiwan is a moderately attractive market in Asia considering all our four elements: Fundamentals, Valuation, Momentum, and Risk.

Fundamentals: The country offers a moderate return-on-equity above the Asia ex-Japan average.

Valuation: The overall average price is attractive due to a relatively low price-to-book ratio and the highest dividend yield in Asia.

Momentum: Taiwan’s momentum is moderate due to good price momentum.

Risk: Taiwan’s high beta and high volatility market make it distinctive compared with other more moribund markets in the neighborhood.

Strong performance in Materials and Energy

Top 3 largest sectors: Information Technology: 46% of the market. Financials: 13%. Materials: 11%.

Best sector & stock: Energy: +15.1% & Formosa Petrochemical: +15.2%

Worst sector & stock: Health Care: -7.9% & OBI Pharma: -35.0%


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DISCLAIMER: This content is for information purposes only. It is not intended to be investment advice. Readers should not consider statements made by the author(s) as formal recommendations and should consult their financial advisor before making any investment decisions. While the information provided is believed to be accurate, it may include errors or inaccuracies. The author(s) cannot be held liable for any actions taken as a result of reading this article.

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Dr. Andrew Stotz, CFA is the CEO of A. Stotz Investment Research, a company providing institutional investors with ready-to- invest portfolios in Asia that aim to beat the benchmark through superior stock selection. The company also provides buy- and sell-side clients with financial models to value any company in the world and World Class Benchmarking to determine what companies are financially world class. Previously, as Head of Research at CLSA, Andrew was voted No. 1 Analyst in Thailand in the Asiamoney Brokers Polls for 2008 and 2009. He was also voted No. 1 Analyst in Thailand in the 2009 Institutional Investor magazine All-Asia Research Team Report. Andrew earned his PhD in finance at the University of Science and Technology of China in Anhui province, with a focus on answering questions raised by fund managers and analysts during his career about picking stocks and managing portfolios. In addition, Andrew has been a lecturer in finance for 22 years at various universities in Thailand. Since 2013, he has been the president of the CFA Society of Thailand. He is also the author of How to Start Building Your Wealth Investing in the Stock Market.