Four Pillars of GDP: Driven by private consumption
Overall, Taiwan is experiencing slow GDP growth, which is basically only driven by private consumption. Investments, however, have had a big contracting impact on GDP growth.
Attractive valuation but poor momentum
The Taiwanese market is trading at a relatively low PE versus other Asian markets. However, earnings growth has been poor and expected to remain below the Asian average. On the positive side Taiwan has the highest dividend yield in Asia.
A. Stotz Four Elements: Moderately attractive
Overall, Taiwan is moderately attractive in Asia considering all our four elements: Fundamentals, Valuation, Momentum, and Risk.
Fundamentals: Moderately attractive fundamentals due to relatively high return-on-equity versus other Asian markets over the past 12 months.
Valuation: Attractive, due to the highest dividend yield in Asia and relatively low PE.
Momentum: Below average earnings growth and poor price momentum.
Risk: Relatively high beta to Asia ex Japan.
The largest sector was the second best performer
Top 3 largest sectors: Information Technology is 49% of the total market capitalization, Financials 13%, and Materials 10%.
Best sector & stock: Consumer Staples +9.8%, Charoen Pokphand Enterprise Taiwan Co Ltd +30.4%.
Worst sector & stock: Health Care -9.1%, OBI Pharma Inc -25.8%.
Article by Dr. Andrew Stotz, Become A Better Investor
