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Apple’s next iPhone seen as best bet for Taiwan top fund manager
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The iPhone 7’s release boosts Taiwan’s exports. (Bloomberg/File)
F
or Taiwan’s top-performing technology fund, Apple Inc.’s next iPhone and self-driving cars are the hottest trades for 2017.
Bullish bets that iPhone orders will boost earnings at the island’s many suppliers have helped drive Taiwan’s benchmark stock gauge to a 1 1/2 year high, while foreign investors have pumped $1.5 billion into local shares this year, the most among Asian markets tracked by Bloomberg.
“The biggest theme this year will be the iPhone,” said Peter Liao, a fund manager at Allianz Global Investors Taiwan Ltd. He singled out companies that make devices supporting wireless charging and augmented reality, which may be new features in the next iPhone, without naming any firms.
(Read also: Apple set to begin making iPhones in India by April’s end)
Liao’s Allianz Global Investors Taiwan Technology Fund has a total return of 28 percent in the past 12 months, the top performance among 49 peers, and almost double the Taiex’s 17 percent gain. The fund’s largest holdings at the end of last year were Taiwan Semiconductor Manufacturing Co., Largan Precision Co. and Hon Hai Precision Industry Co. -- all Apple suppliers. An index of the biggest 10 suppliers to Apple has advanced 14 percent so far this year, compared with a 2.2 percent gain for the Taiex.
The iPhone 7’s release last year was a boost to Taiwan’s exports. Shipments snapped a 17-month run of declines in July and climbed at the fastest pace since 2013 in December, while industrial production has also been on a steady uptrend in the past year.
Among the fund’s top holdings, Tong Hsing Electronic Industries Ltd. manufactures products that can be used in self-driving systems. This technology is likely to undergo "gradual upgrades" in features such as impact prevention and automated parking, according to Liao.
Liao predicts a diversified market where small caps advance amid accelerating earnings growth, whereas heavyweights with steady dividend yields could underperform as U.S. interest rates rise. Small and mid caps accounted for four of the five stocks with highest contribution to Allianz Global Investors Taiwan Technology Fund’s return in 2016, according to Bloomberg.
Kingpak Technology Inc. (6238 TT): Provides integrated circuit package assembly services for automobile and industrial applications Chunghwa Precision Test Tech Co. (6510 TT): Manufactures printed circuit boards Tong Hsing Electronic (6271 TT): Manufactures ceramic circuit boards and multichip IC modules Boardtek Electronics Corp. (5349 TT): Makes multi-layered and double-sided printed circuit boards. (dan)
