UBS prefers Taiwan, Thai, Korean stocks

Swiss bank UBS expects Taiwan, Thai and South Korean stocks to outperform regional peers this year thanks to cheaper earnings multiples, a Taipei-based analyst said Wednesday.
Ken Chen, UBS research head in Taiwan, also said closer economic ties between Taipei and Beijing would help many Taiwan companies.

"Relatively speaking, Taiwan will outperform Asia. We also like South Korea and Thailand because all of them are cheaper," he told reporters.

"Another positive factor for Taiwan is the easing of its relations with China, benefiting stocks of Taiwan banks, hotel operators and real estate companies on hopes of rising demand from Chinese tourists," Chen said.

Taiwan stocks are trading at 12.8 times forecast 2007 earnings, while Thai stocks are at a price/earnings ratio of 9.95 and South Korea's market is at 13.6 times, according to Reuters data.

By comparison, Shanghai's main index is trading at 24 times last year's earnings, Singapore stocks are at 14.3 and Hong Kong's Hang Seng index is at 13.4.

UBS's comments came after Taiwan's main TAIEX share index ended 2.3 percent lower Wednesday, one day after its worst drop in four years, on concerns rate cuts by the Federal Reserve would not be enough to stave off a recession in the United States -- Taiwan's main export market.

The index has dropped about 9 percent over two sessions.