Taiwan’s High-Risk, High-Yield Market

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.

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

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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In 1992 Dr. Andrew Stotz, CFA, left a management career at Pepsi-Cola in California to teach finance in Thailand. In 1993, he found his life calling as a financial analyst, a job for which he was eventually voted #1 in Thailand. In the second half of his 20-year career in investment banking, Dr. Stotz was a Head of Research, leading teams of financial analysts. He served as a two-term president of CFA Society Thailand and now runs his firm, A. Stotz Investment Research, which provides research and tools for institutions and high-net-worth investors and helps CEOs make their companies financially world class.
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