Taipei, June 26 (CNA) Foreign institutional investors are expected to take almost 40 percent of the total cash dividend payouts issued by listed companies on the local main board and over-the-counter market, according to statistics released Monday by Prudential Financial Securities Investment Trust Enterprise.
According to the data, listed companies on the domestic equity market are planning to issue about NT$1.27 trillion (US$41.91 billion) in total cash dividends for their 2016 earnings. With foreign institutional investors holding a large chunk of local equities, Prudential estimated that they will receive more than NT$490 billion, or almost 40 percent of the total.
In an annual general meeting held June 8, Morris Chang, chairman of contract chip maker Taiwan Semiconductor Manufacturing Co. (TSMC), urged local investors to buy more TSMC shares in a bid to share more earnings posted by the profitable company.
For its part, TSMC will issue NT$7 in cash dividend per share for its 2016 earnings per share of NT$12.89.
The world's largest contract chip maker is scheduled to hand out a total of NT$167.5 billion in cash dividends on July 20. Since foreign institutional investors hold a roughly 80 percent stake in TSMC, the majority of the cash given by TSMC will go into foreign hands.
Chang, who holds a 0.48 percent stake in TSMC, is expected to receive NT$876 million in cash dividends, while the National Development Fund under the Executive Yuan, one of the top 10 shareholders of TSMC, owning a 6.38 percent stake in the chip maker, is expected to pocket NT$11.58 billion in cash dividends.
At present, the local equity market is entering a season when many companies, including TSMC, are going ex-dividend. After shareholders bag massive cash dividends, it will be worth watching whether investors, no matter whether foreign institutional ones or local retail investors, will put the money into the market in the near term, Prudential said.
On Friday, the weighted index on the Taiwan Stock Exchange closed up 1.31 percent at the day's high of 10,513.96 points on strong buying by foreign institutional investors. The Friday closing level was the highest since April 4, 1990, when the index ended at 10,907.09.
Yeh Hsien-wen, manager of the Prudential Financial High Growth Fund, said that based on the past index movement pattern in the local equity market, the weighted index has a 50 percent chance of going higher in July and the chance is expected to rise to 70 percent in September, led by the bellwether electronics sector, as the industry will enter a peak season of the year.
Yeh said that on the back of international brands launching new smartphones, including the next-generation iPhones, Taiwan's economy is expected to continue to recover due to outbound sales by Taiwanese exporters, which could attract more foreign funds in the second half of the year.
He suggested that investors had better pay more attention to semiconductor stocks and Apple concept stocks.
