Taiwan’s technology stocks are expected to recover lost ground this year as their main market the United States shows signs of a recovery, says Mark Matthews, Head of Research Asia at Bank Julius Baer.
"Half the (Taiwan) market is tech. The NASDAQ was up 6 percent last year, but the Taiex was down 18 percent. It's very cheap. I think there's a recovery in the U.S. economy, and some important catalysts in the PC sector...which are going to cause nice replacement cycles in PCs," Matthews said.
The Windows 8 launch towards the end of the third quarter this year and the introduction of ultrabooks using Intel's Ivy Bridge chip in April, will give the PC sector in the U.S. a boost, said Matthews.
Among his top picks is Acer, the world's third largest PC maker after Lenovo and HP. The stock was down more than 60 percent last year. Matthews says that's because 40 percent of Acer's revenues come from Europe.
However, he says, that will change as Acer's European troubles are behind them. "A write-off in European inventory caused a loss last year. Having changed management and re-focused…we expect a profit this year."
Matthews has a target price of 45 Taiwan dollars ($1.5) for the stock, which closed Tuesday at 42.40 Taiwan dollars.
Consumer electronics and IT firm Asustek is another one of his top picks. He says in the fourth quarter of last year, Asustek had the largest growth in unit shipments among its peers, which was led by growth in the Asia Pacific region including China.
"[Asustek] will experience a strong recovery in its motherboard business (which makes up 30 percent of its revenues) following (hard disk drive) disruptions caused by Thai floods," said Matthews who has a target price of 270 Taiwan dollars on the stock. The stock closed at 243.50 Taiwan dollars on Tuesday.