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When the chips go up: Big banks bet on S. Korea, Taiwan stocks for 2023

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When the chips go up: Big banks bet on S. Korea, Taiwan stocks for 2023

Dec 1 (Reuters) – World banks are turning bullish on South Korean and Taiwanese shares, anticipating a revival in semiconductors to drive a rally subsequent yr, whereas they see Japan’s market as resilient thanks partly to its weak forex.

The calls come as U.S. charges are nonetheless rising, with most markets world wide eyeing their worst annual returns because the 2008 international monetary disaster and with chipmakers’ earnings cratering.

Goldman Sachs says South Korean shares are the financial institution’s prime “rebound candidate” for 2023 because of low valuations, made cheaper by a nosediving Korean gained, and as corporations profit from an anticipated restoration in Chinese language demand. It expects a 2023 return in greenback phrases of 30%.

Morgan Stanley additionally offers Korea prime billing. Along with Taiwan, it’s the finest place to be, says the financial institution, as the 2 markets have a fame as “early-cycle” leaders within the demand restoration.

Financial institution of America, UBS, Societe Generale and Deutsche Financial institution’s wealth supervisor DWS are all bullish on Korean shares, with analysts’ conviction in that commerce mendacity in sharp distinction to its divided view on India and China.

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“Within the semiconductor space, demand ought to backside within the first quarter of subsequent yr and the market all the time begins to run earlier than that,” stated DWS’ Asia-Pacific chief funding officer, Sean Taylor, who added Korean publicity in latest months.

“We expect (Korean shares) bought off an excessive amount of in September and August.”

South Korea’s benchmark KOSPI index (.KS11) has misplaced about 17% thus far this yr and the gained has declined 9%, although each have proven indicators of restoration in latest months.

Goldman Sachs additionally famous that 5 years of promoting has pushed international possession of Korean shares to its lowest stage since 2009, however inflows of about $6 billion since end-June “signifies a flip in international curiosity” that might carry the market additional.

Societe Generale’s suggestion for buyers to extend their publicity to Korea and Taiwan comes on the expense of China, India and Indonesia. Goldman’s desire for Korean shares comes because it has recommended a discount in Brazil publicity. Morgan Stanley downgraded its view on Indian publicity in October, when it upgraded its suggestion for South Korea.

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Morgan Stanley is most bullish on chipmakers turning out commoditised low-cost chips in addition to chips destined for shopper items – together with corporations resembling Samsung Electronics (005930.KS) or SK Hynix (000660.KS). Morgan Stanley has a worth goal for SK Hynix about 50% above the present share worth.

Semiconductors drive rebound

RISK-REWARD

Taiwan and Japan provide points of interest for some comparable and a few novel causes. Like South Korea, Taiwan (.TWII) is one other heavily-sold and chip-maker dominated market – although tensions with China make some buyers a bit much less enthusiastic.

Goldman Sachs is underweight Taiwanese shares, citing geopolitical danger, whereas Financial institution of America is impartial and its most up-to-date survey of Asian fund managers exhibits they’re bearish.

Japan (.N225) additionally provides chips publicity in addition to some safety and diversification, with the weak yen additionally a tailwind for exporters and sometimes a boon for equities.

“A sustained keep at such undervalued ranges, as anticipated by our FX strategists, augurs properly for Japan equities,” stated Financial institution of America analysts, who advocate obese allocation to Japan. Morgan Stanley, DWS, UBS are additionally optimistic, as is Goldman Sachs, particularly for the second half when it forecasts inflows.

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There may be much less settlement with regards to China, the place large buyers appear to be in a wait-and-see mode, or India the place funding homes really feel an 8% rally for the benchmark Sensex (.BSESN) has left valuations a bit expensive.

To make certain, a lot of the banks’ funding calls relaxation on assumptions that U.S. rates of interest ultimately cease going up and China ultimately relaxes its COVID guidelines.

In the meantime, Taiwan and South Korea are each geopolitical flashpoints – however analysts argue no less than a few of that’s already within the worth.

“There was some political concern in each Korea and Taiwan for a very long time,” stated Societe Generale’s head of Asia fairness technique, Frank Benzimra.

“Issues can all the time worsen,” he stated. “However when it comes to the risk-reward, what we discover is that a lot of the lowly valued markets, whether or not it is Korea or Taiwan … have extra restricted draw back due to the buildup of dangerous information that we now have seen during the last 12 months.”

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Reporting by Harish Sridharan in Bengaluru; Enhancing by Ana Nicolaci da Costa

Our Requirements: The Thomson Reuters Belief Rules.

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Israel keeping its ‘eyes open’ for Iranian attacks during Trump transition period, ambassador says

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Israel keeping its ‘eyes open’ for Iranian attacks during Trump transition period, ambassador says

Israel’s U.N. Ambassador Danny Danon tells Fox News Digital that his country is keeping its “eyes open” for any potential aggression from Iran during the Trump transition period, adding it would be a “mistake” for the Islamic Republic to carry out an attack. 

The comments come after Iranian Foreign Minister Abbas Araghchi vowed earlier this week that Iran would retaliate against Israel for the strategic airstrikes it carried out against Tehran on Oct. 26. Araghchi was quoted in Iranian media saying “we have not given up our right to react, and we will react in our time and in the way we see fit.” 

“I would advise him not to challenge us. We have already shown our capabilities. We have proved that they are vulnerable. We can actually target any location in Iran. They know that,” Danon told Fox News Digital. 

“So I would advise them not to make that mistake. If they think that now, because of the transition period, they can take advantage of it, they are wrong,” he added. “We are keeping our eyes open and we are ready for all scenarios.” 

ICC REJECTS ISRAELI APPEALS, ISSUES ARREST WARRANTS FOR BENJAMIN NETANYAHU, YOAV GALLANT 

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Israel’s U.N. Ambassador Danny Danon tells Fox News Digital that his country is “ready for all scenarios” coming from Iran during the Trump transition period. (Fox News)

Danon says he believes one of the most important challenges for the incoming Trump administration will be the way the U.S. deals with Iran. 

“Regarding the new administration, I think the most important challenge will be the way you challenge Iran, the aggression, the threat of the Iranian regime. I believe that the U.S. will have to go back to a leading position on this issue,” he told Fox News Digital. 

“We are fighting the same enemies, the enemies of the United States of America. When you look at the Iranians, the Houthis, Hezbollah, Hamas, all those bad actors that are coming against Israel… that is the enemy of the United States. So I think every American should support us and understand what we are doing now,” Danon also said. 

IRAN HIDING MISSILE, DRONE PROGRAMS UNDER GUISE OF COMMERCIAL FRONT TO EVADE SANCTIONS 

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House Speaker Mike Johnson and Rep. Elise Stefanik

Rep. Elise Stefanik, R-N.Y., is acknowledged by President-elect Donald Trump alongside Speaker of the House Mike Johnson during a meeting with House Republicans at the Hyatt Regency hotel in Washington, D.C., on Nov. 13, 2024. Stefanik has been chosen by President-elect Donald Trump as the next U.S. ambassador to the United Nations. (Allison Robbert/Pool via REUTERS)

Danon spoke as the U.S. vetoed a draft resolution against Israel at the U.N. Security Council on Wednesday. 

The resolution, which was overseen by Algeria, sought an “immediate, unconditional and permanent cease-fire” to be imposed on Israel. The resolution did not guarantee the release of the hostages still being held by Hamas within Gaza. 

Israeli military planes

Israeli Air Force planes departing for the strikes in Iran on Oct. 26. (IDF Spokesman’s Unit)

 

“It was a shameful resolution because… it didn’t have the linkage between the cease-fire and the call [for] the release of the hostages. And I want to thank the United States for taking a strong position and vetoing this resolution,” Danon said. “I think it sent a very clear message that the U.S. stands with its strongest ally with Israel. And, you know, it was shameful, too, to hear the voices of so many ambassadors speaking about a cease-fire but abandoning the 101 hostages. We will not forget them. We will never abandon them. We will continue to fight until we bring all of them back home.” 

Fox News’ Benjamin Weinthal contributed to this report. 

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Fact-check: What do we know about Russia’s nuclear arsenal?

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Fact-check: What do we know about Russia’s nuclear arsenal?

Moscow has lowered the bar for using nuclear weapons and fired a missile capable of carrying a nuclear warhead into Ukraine, heightening tensions with the West.

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Russia’s nuclear arsenal is under fresh scrutiny after an intermediate-range ballistic missile capable of carrying an atomic warhead was fired into Ukrainian territory.

President Vladimir Putin says the unprecedented attack using the so-called “Oreshnik” missile is a direct response to Ukraine’s use of US and UK-made missiles to strike targets deep in Russian territory.

He has also warned that the military facilities of Western countries allowing Ukraine to use their weapons to strike Russia could become targets.

The escalation comes days after the Russian President approved small but significant changes to his country’s nuclear doctrine, which would allow a nuclear response to a conventional, non-nuclear attack on Russian territory.

While Western officials, including US defence secretary Lloyd Austin, have dismissed the notion that Moscow’s use of nuclear weapons is imminent, experts warn that recent developments could increase the possibility of nuclear weapons use.

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Here’s what we know about Russia’s inventory of atomic weapons.

How big is Russia’s nuclear arsenal?

Russia holds more nuclear warheads than any other nation at an estimated 5,580, which amounts to 47% of global stockpiles, according to data from the Federation of American Scientists (FAS).

But only an estimated 1,710 of those weapons are deployed, a fraction more than the 1,670 deployed by the US. 

Both nations have the necessary nuclear might to destroy each other several times over, and considerably more atomic warheads than the world’s seven other nuclear nations: China, France, India, Israel, North Korea, Pakistan and the United Kingdom.

Of Moscow’s deployed weapons, an estimated 870 are on land-based ballistic missiles, 640 on submarine-launched ballistic missiles, and potentially 200 at heavy bomber bases.

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According to FAS, there are no signs Russia is significantly scaling up its nuclear arsenal, but the federation does warn of a potential surge in the future as the country replaces single-warhead missiles with those capable of carrying multiple warheads.

Russia is also steadily modernising its nuclear arsenal.

What could trigger a Russian nuclear response?

Moscow’s previous 2020 doctrine stated that its nuclear weapons could be used in response to an attack using nuclear or other weapons of mass destruction “when the very existence of the state is put under threat.”

Now, the conditions under which a nuclear response could be launched have changed in three crucial ways:

  1. Russia will consider using nuclear weapons in the case of a strike on its territory using conventional weapons, such as cruise missiles, drones and tactical aircraft.
  2. It could launch a nuclear attack in response to an aggression by a non-nuclear state acting “with the participation or support of a nuclear state”, as is the case for Ukraine.
  3. Moscow will also apply the same conditions to an attack on Belarus’ territory, in agreement with President Lukashenko.

Is there a rising nuclear threat?

The size of the world’s nuclear stockpiles has rapidly decreased amid the post-Cold War détente. The Soviet Union had some 40,000 warheads, and the US around 30,000, when stockpiles peaked during the 1960s and 70s.

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But FAS warns that while the overall number is still in decline, operational warheads are on the rise once again. More countries are also upgrading their missiles to deploy multiple warheads.

“In nearly all of the nuclear-armed states there are either plans or a significant push to increase nuclear forces,” Hans M. Kristensen, Director of the Nuclear Information Project at the Federation of American Scientists (FAS), said in June this year.

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Is the West reacting?

When Putin approved the updated nuclear protocol last week, many Western leaders dismissed it as sabre rattling.

German Foreign Minister Annalena Baerbock said Germany and its partners would “not be intimidated” and accused Putin of “playing with our fear.”

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But since Russia used a hypersonic ballistic missile capable of carrying a nuclear warhead in an attack on Dnipro, European leaders have raised the alarm.

“The last few dozen hours have shown that the threat is serious and real when it comes to global conflict,” Polish Prime Minister Donald Tusk said on Friday.

According to Dutch media reports, NATO’s secretary-general Mark Rutte is in Florida to urgently meet President-elect Donald Trump, potentially to discuss the recent escalation.

NATO and Ukraine will hold an extraordinary meeting in Brussels next Tuesday to discuss the situation and the possible allied reaction, according to Euronews sources.

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Rental home investors poised to benefit as mortgage rates, high home prices sideline buyers in 2025

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Rental home investors poised to benefit as mortgage rates, high home prices sideline buyers in 2025

LOS ANGELES (AP) — Rental homes will remain an attractive option next year to would-be homebuyers sidelined by high mortgage rates and rising home prices, analysts say.

American Homes 4 Rent and Invitation Homes are two big real estate investment trusts poised to benefit from the trend, say analysts at Mizuho Securities USA and Raymond James & Associates.

Their outlooks boil down to a simple thesis: Many Americans will continue to have a difficult time finding a single-family home that they can afford to buy, which will make renting a house an attractive alternative.

It starts with mortgage rates. While the average rate on a 30-year mortgage fell to a two-year low of 6.08% in late September, it’s been mostly rising since then, echoing moves in the 10-year Treasury yield, which lenders use as a guide to pricing home loans.

The yield, which has hovered around 4.4% this week, surged after the presidential election, reflecting expectations among investors that President-elect Donald Trump’s proposed economic policies may widen the federal deficit and crank up inflation.

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Analysts at Raymond James and Associates say they see mortgage rates remaining “higher for longer,” given the outcome of the election. Last week, they reiterated their “Outperform” ratings on American Homes 4 Rent and Invitation Homes, noting “we are increasingly confident in the longer-term outlook for single-family rental fundamentals and the industry’s growth prospects.”

They also believe the two companies will continue to benefit from “outsized demographic demand for suburban homes,” and the monthly payment gap between renting and owning a home, which they estimate can be as much as 30% less to rent.

Analysts at Mizuho also expect that homeownership affordability hurdles will maintain “a supportive backdrop” and stoke demand for rental houses, helping American Homes 4 Rent and Invitation Homes to maintain their tenant retention rates.

The companies are averaging higher new and renewal tenant lease rates when compared to several of the largest U.S. apartment owners, including AvalonBay, Equity Residential and Camden Property Trust, according to Mizuho. It has an “Outperform” rating on American Homes 4 Rent and a “Neutral” rating on Invitation Homes.

Shares in Invitation Homes are down 1.2% so far this year, while American Homes 4 Rent is up 4.4%. That’s well below the S&P 500’s 24% gain in the same period.

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While individual homeowners and mom-and-pop investors still account for the vast majority of single-family rental homes, homebuilders have stepped up construction of new houses planned for rental communities.

In the third quarter, builders broke ground on about 24,000 single-family homes slated to become rentals. That’s up from 17,000 a year earlier. In the second quarter, single-family rental starts climbed to 25,000, the highest quarterly total going back to at least 1990, according to an analysis of U.S. Census data by the National Association of Home Builders.

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