Taiwan stocks offer hefty yield as global investors still selling

Bloomberg

The cash reward for owning Taiwan stocks is larger than almost anywhere else in Asia. Global investors are ditching them anyway.
Even with the benchmark Taiex gauge near a record high, managers have pulled about $680 million from Taiwan stock funds this month. The withdrawals come even as corporate dividends top US yields and just as a record amount of debt globally yields less than zero.
Investors who leaped into Taiwan stocks earlier this year aren’t eager to do it again: the economy’s firms are so entwined with the global technology supply chain that they’ve been particularly vulnerable to the trade war and a slowdown in the smartphone market.
“High dividend yields make Taiwan stocks attractive to global investors in a low interest rate environment, but it’s only one of the elements to consider,” said Agnes Lin, a global market strategist at JPMorgan Asset Management Taiwan. The island’s weak economic fundamentals, partly the result of the US-China trade clash, are also turning investors off the equities, she said.
The Taiex measure rose
0.7 percent on Monday in Taipei to the highest close in two months.
Some $13 trillion of bonds globally trade with negative yields, which is destroying potential returns. That has investors looking elsewhere. While US stocks have surged to record levels, Taiwan hasn’t provided the answer — at least for now as it struggles to reclaim last year’s highs.
The main problem has been the trade friction between the world’s two largest economies. Taiwan’s export orders have dropped for the seven months through May.
Tech stocks, which account for nearly half of the Taiex gauge, have been whipsawed as the US banned companies from supplying China’s Huawei Technologies Co.