The theme of today’s report is “Taiwan stocks fell 1,600 points to hit the first foot, and shipping ignites long confidence.”
Wanbao Investment Gu Cai Mingzhang emphasized that the principle that the stock market cycle will never change is to “fall bottom in pessimism, rise in doubt, and take the lead in optimism.”
Taiwan stocks have fallen 1,600 points since their high of 18,034 points. Although the decline did not exceed 2,500 points in May, the market fell sharply for only 12 trading days at that time, but this time it was a slow decline of 25 trading days. The prolonged processing time has led to the collapse of market confidence and pessimism among investors.
In the past 10 years, Taiwan stocks have only fallen three times in a row for 9 days. Except this time, it was the Sino-US trade war on August 7, 2019, and the European debt crisis on May 7, 2010. Therefore, the market hasn’t had many consecutive nine-day losses. All happened in major crises.
Wanbao Investment Gu Cai Mingzhang emphasized that many people are puzzled, what exactly did this wave of Taiwan stocks fall? This year, Taiwan’s GDP growth rate was revised up to 5.88%. Listed companies made nearly 2 trillion yuan in the first half of the year, writing their best record in history. In addition to good fundamentals, looking at the bargaining chips, the financing balance of this wave has risen from a peak of 300 billion yuan. So far, it has greatly reduced more than 30 billion yuan, and the margin of financial weight loss is 10%, which has exceeded 9% of the index decline. Past historical experience is that the bargaining chip has effectively changed hands.
Finally, looking at the technical side, Taiwan stocks fell below the half-year line, staying above the monthly line for relatively strong US stocks and European stocks, and among the weaker other Asian stocks, the South Korean stock market, whose industrial structure is similar to that of Taiwan stocks, has only recently fallen below the half-year line. , And there was a strong rebound after an eight-day losing streak on Wednesday.
The daily K value of the weighted index has reached 14%, falling into the oversold area below 20%. In May, the market fell sharply by 2,500 points, and the corresponding K value was still 23%. The new crown epidemic was the most serious in March last year. The stock plunged 3,000 points and bottomed out at 8,523 points, corresponding to a K value of 7%. In other words, the K value this time is the lowest since 8,523 points, which means that after a correction of 1,600 points, the technical side of Taiwan stocks is seriously oversold.
Looking back, the main reason for the sharp decline in Taiwan stocks is the worsening of the epidemic in Asia and the lack of vaccines. Although Taiwan’s local epidemic has been brought under control, Taiwan’s overseas production supply chain in Southeast Asia and the mainland is experiencing an increase in the epidemic and production shutdowns, which may impact Taiwan’s exports and economic growth in the second half of the year.
In addition, the proportion of the population in Taiwan who have been fully vaccinated is too low. The global economy will be unblocked next year, which will not be harmful to Taiwan’s foreign trade exchanges, and will also inhibit next year’s economic growth. In addition, foreign capital has sold more than Taiwan’s stocks by 510 billion yuan this year. Last year, it sold more than 540 billion yuan, less than two years, and sold 1 trillion yuan. This selling method reached a critical point and finally caused the current wave to fall.
Wanbao Investment Gu Cai Mingzhang emphasized that, in all fairness, Taiwan’s hot money is surplus, the total deposit in the banking system is 40 trillion yuan, and the balance of the securities transfer account is 3 trillion yuan. It does not care that foreign funds sell for more than 1 trillion yuan in two years, but Taiwan stocks must be confident in their funding. Dinghaishenzhen.
Since the implementation of the tax cut in 2017, Taiwan stocks have risen from 8,000 points to this year’s high of 18,000 points. The daily trading volume has risen from 70 billion yuan to the highest this year, 780 billion yuan. After the extension, the trading volume of Taiwan stocks shrank to 300 billion yuan.
Trading volume has fallen sharply. Another important reason for the introduction of equity wave consolidation is that the policy must give a clear answer as soon as possible, “Whether the tax cut is extended?” According to media reports, the various ministries and committees have reached a consensus to extend the tax reduction for another three years, but it will not be officially announced until the Executive Yuan passes it at the end of August.
In July, the stock tax exceeded 30 billion yuan, a record high in a single month. In the previous July, the stock tax was 170.8 billion yuan, a record high over the same period. The relief budget for this year has been increased to 630 billion yuan. Next, 110 billion yuan in promotion coupons will be issued. Based on the high evaluation of the state’s finances, prolonging tax cuts and maintaining the stock market will definitely have more advantages than disadvantages.
Wanbao Investment Gu Cai Mingzhang emphasized that the Taiwan stock market opened lower and rose higher on Wednesday, with an intraday low of 16,418 points, which can be regarded as the first leg. TSMC (2330-TW) is weak, suppressing the market’s rebound. Tianyu (4961-TW) and Duntai (3545-TW), which have high EPS designs in IC design, were concerned about Huawei’s development of driver ICs, and they dropped at the intraday limit. If the second leg is no longer effectively below 16,418 points, Taiwan stocks will rebound in a real wave.
This year, shipping stocks have made investors love and hate, but it is an indisputable fact that Taiwan stocks have moved up and down. The broader market fell at the bottom of May 15,159. After the three consecutive drops of three consecutive limit-downs, Container Sanxiong Evergreen (2603-TW) and Yangming (2609-TW) made a big counterattack and became the commander-in-chief of the Taiwan stock market. However, in July, Sanxiong Container sank by 40-50 %, the market retreated in August and revised, proving that the shipping stocks are the wind direction of the market.
Shipping once again ignited bullish information on Wednesday, with bulk carriers AVIC (2612-TW), Taiwan Airlines (2617-TW), and Siwei Airlines (5608-TW) taking the lead in daily limit. Due to the fact that the container Sanxiong has more chips, the daily limit will be turned on in the second half. Unlike the previous situation, as the mainland Ningbo Zhoushan Port is the third largest container port in the world, it is also an important transshipment port for China’s coal, iron ore, and crude oil. Iron ore accounted for 30% of China, causing the BDI index to rise for 6 consecutive days and hit an 11-year high of 3,657 points. The BDI index rose for 6 consecutive days, but Taiwan stocks fell for 9 consecutive days. Of course, the bulk stock price was undervalued. Smart money began on Wednesday. Bargain hunters.
China’s steel production cuts in the second half of the year caused the upstream raw material iron ore futures to fall by 34% since the July high. This is bad for iron ore producers, but it is bullish for steel producers and the bulk carriers it carries. The former reduces costs and widens spreads, while the latter benefits from the reduction of iron ore inventories at Chinese ports. In addition to iron ore and coal, bulk ships transport grains and grains. South America has experienced drought this year and grain prices have skyrocketed. September is the peak season for grain delivery.
Wanbao Investment Gu Cai Mingzhang emphasized that the EPS of Sanxiong in the first half of the year is 15-17 yuan, and the annual estimate is 35-37 yuan. Everyone knows the single-digit P/E ratios of Evergreen, Yangming, and Wanhai (2615-TW). Understand, so we have a large stake in the bargaining chip, and the future container three will rebound and counter pressure.
In contrast, the explosive power of EPS in bulk wheels, the market is not clear, and the hold-up pressure is less. AVIC’s EPS this year is estimated at 7 yuan, which is 3.1 times higher than last year’s 1.67 yuan. Taiwan Airlines’ EPS is estimated at 2.3 yuan this year, an increase of 85% from last year’s 1.24 yuan. Four-dimensional Aviation estimates its EPS of RMB 5 this year, a significant turnaround from last year’s loss of RMB 3.2. Yumin (2606-TW) is estimated to be 3.8 yuan this year, a 2.6 times increase from 1.04 yuan last year. Huiyang-KY(2637-TW) This year’s EPS is estimated at 6 yuan, which is a 39-fold increase compared to last year’s 0.15 yuan.
Remember that Taiwan stocks are now entering the second half. Dark horses may not be the stocks with the highest EPS and the lowest P/E ratio. They are often stocks that are relatively unknowing to the bulls and have relatively clean chips.
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