臺(tái)灣地區(qū)策略：復(fù)蘇內(nèi)部動(dòng)力

1、TaiwanEquity Strategy2020 Vision: Revving up the domestic engineTaiwan StrategyTHIS CONTENT MAY NOT BE DISTRIBUTED TO MAINLAND CHINATaiwans 2020 Vision is not just all about tech, there is a brewing domestic reflation storyRe-election victory reaffirms governments “Welcome Home” economic policies to

2、 attract investment repatriationBuy-rated TSMC, MediaTek and Uni-President are the three names to watch in 2020Top debate for 2020: Can repatriated investments rev up Taiwans economic engine?Trade tensions have prompted a shift in manufacturing and talent back home, putting a brake on the decade-lon

3、g hollowing-out effect on the domestic economy. With her re-election, President Tsai has the mandate to continue with the “Welcome Home” policy initiatives, which have seen 168 companies pledge a total investment of TWD715bn since 2019. This investment will likely be put to use in 2020 and contribut

4、e more positively to the growth of various domestic sectors, such as infrastructure, construction, property, retail, and financials.What else to watch in 2020Will mainland China lift its tourist ban to Taiwan?Tourist trips to Taiwan were suspended in August 2019. Since then, monthly Chinese visitor

5、arrivals have dropped to their lowest level since 2010.ECFA discussionThe Economic Cooperation Framework Agreement (ECFA) was signed between Taiwan and mainland China in 2010; it may be re-examined in 2H20.Play IMO 2020 through TaiwanTwo of our top regional IMO 2020 Buy ideas are in Taiwan: Formosa

6、Petrochemical (FPCC, 6505 TT, TP TWD115) and Evergreen Marine (2603 TT, TP TWD13.2).5G smartphone penetration storyOur tech team remains bullish on the 5G smartphone sector and expects a further re- rating through end-1Q20/2Q20 driven by upside from Chinese smartphone vendors.Three stocks to watch i

7、n 2020:TSMC (2330 TT, Buy, TP TWD397) exposed to multiple future tech driversMediaTek (2454 TT, Buy, TP TWD500) a play on Chinas 5G smartphone growthUni-President (1216 TT, Buy, TP TWD83) beneficiary of domestic consumption recovery16 January 2020Jeremy Chen*Head of Research, TaiwanHSBC Securities (

8、Taiwan) Corporation Limited HYPERLINK mailto:jeremy.cm.chen.tw jeremy.cm.chen.tw+886 2 6631 2866Evelyn Yu* Research AssociateHSBC Securities (Taiwan) Corporation Limited HYPERLINK mailto:evelyn.cc.yu.tw evelyn.cc.yu.tw+886 2 6631 2867Employed by a non-US affiliate of HSBC Securities (USA) Inc, and i

9、s not registered/ qualified pursuant to FINRA regulationsDisclosures & DisclaimerThis report must be read with the disclosures and the analyst certifications in the Disclosure appendix, and with the Disclaimer, which forms part of it.Issuer of report: HSBC Securities (Taiwan) Corporation LimitedView

10、 HSBC Global Research at:https: HYPERLINK / /Figure 1. Focus chart: Taiwans gross fixed capital formation (GFCF) is set to accelerate to 10%/6% YoY in 2019e/2020e from a 10-year average of 3.0%5,000,0004,500,0004,000,0003,500,0003,000,0002,500,0002,000,0001,500,0001,000,000500,000-(TWDm)200920102011

11、20122013201420152016201720182019e2020e25.0%20.0%15.0%10.0%5.0%0.0%-5.0%-10.0%-15.0%GFCF: Private enterprisesGFCF: Public enterprisesGFCF: GovernmentYoY (RHS)10-y avg. growth (RHS)Source: Taiwan Directorate General of Budget, Accounting and Statistics (DGBAS), HSBC*2019e, 2020e estimates by DGBASTop

12、debate for 2020Can investment repatriation rev up Taiwans long-stalled economic engine?Years of an investment exodus and industrial hollowing-out could be reversing as the US- mainland China trade tensions have triggered a shift in manufacturing and talent back home. Eyeing this opportunity, the Tai

13、wanese government has rolled out a three-year (2019-21) plan to provide incentives, tax breaks, and assistance with land acquisition to attract offshore business. These initiatives have been effective: 168 companies have pledged to invest TWD715bn since 2019, representing c4% of Taiwans nominal GDP.

14、 Luring these offshore riches back home could have a lasting impact on the domestic economy, which has experienced stagnant growth since the factories left decades ago.What are the government initiatives?On 1 July 2019, the government launched three major investment programs designed to give Taiwane

15、se businesses greater confidence to invest in Taiwan, which included a new iteration of the Action Plan for Welcoming Overseas Taiwanese Businesses to Return to Invest in Taiwan” (abbreviated as “Welcome Back Action Plan”) plus the Action Plan for Accelerated Investment by Domestic Corporations” and

16、 Action Plan for Accelerated Investment by SMEs”. Under these programs, companies can enjoy a preferential government bank fee contribution of up to 1.5% depending on the capitalisation. Other preferential measures include a 15ppt increase in the percentage of foreign employees permitted, up to a ma

17、ximum of 40%. The government will also provide assistance with land acquisition, and stable electricity and water supplies. The government estimates these initiatives could attract over TWD900bn in investment and create nearly 70,000 jobs.Table 1. Overview of three major investment programs launched

18、 by the Taiwan governmentProgramWelcoming Overseas Taiwanese Businesses to Return to Invest in TaiwanAccelerated Investment by Domestic CorporationsAccelerated Investment by Small-Medium Enterprises (SMEs)Implementation PeriodJanuary 1, 2019 - December 31, 2021July 1, 2019 December 31, 2021July 1, 2

19、019 December 31, 2021Target GroupTaiwanese companies, affected by the tradeDomestic corporations, not classified asEnterprises, qualified as SMEs, using uniformtensions, that have been investing in mainland China SMEs, have never invested in mainlandinvoices and have not applied for “Welcomefor at l

20、east 2 yearsChinaBack Action Plan”EligibilityManufacturing sector: Returning companies newly established or expanded production lines should partly incorporate smart technologies or intelligent functions. Also, companies should meet at least one of the following requirements:Fall into sectors of the

21、 “5+2 Industrial Innovation Program.”Belong to industries involving high value- added products and/or key components.Play a critical role in the international supply chain.Promote global marketing in private-label brands.Relate the investment project to national key industrial policies.Manufacturing

22、 sector: Companies newly established or expanded production lines should partly incorporate smart technologies or intelligent functions. Also, companies should meet at least one of the following requirements:Fall into sectors of the “5+2 Industrial Innovation Program.”Belong to industries involving

23、high value-added products and/or key components.Play a critical role in the international supply chain.Promote global marketing in private-label brands.Relate the investment project to national key industrial policies.Service sector: The investment plan should incorporate smart technologies or intel

24、ligent functions, and should be related to national key industrial policies.Program Budget forPreferential LoanTWD500bnTWD80bnTWD100bn(An additional budget of TWD100m from SME Credit Guarantee Fund offers a maximum guarantee of 95% of the credit loan and 0.3% of bank fee contribution.)capitalization

25、: TWD10bn: 0.1%Contribution caps are based on enterprise 1.5%SMEs: 1.5%;Large enterprises (based on capitalization): TWD10bn: 0.1%Maximum Government Bank Fee ContributionPreferential Loan Period5 yearsFinancial ResourceNational Development Fund, Executive YuanSME Development FundOther Preferential M

26、easuresA 15% increase for foreign employees permitted (maximum 40%); assistance in land acquisition; stable electricity and water supplies; customised tax incentive consulting services.Assistance in ensuring adequate supplies of land, electricity and water, as well as customized tax incentive consul

27、ting services.Source: Invest Taiwan, NDC, MOEA, Department of Investment Services of MOEA, HSBCIn August 2019, a special bill (“The Management, Utilization, and Taxation of Repatriated Offshore Funds Act”) was approved to grant a one-off preferential tax benefit to Taiwanese companies and individual

28、s who repatriate overseas earnings. Under this two-year scheme, companies or individuals will be taxed 8% and 10% respectively, in the first and second year on the repatriated amount, compared with 20% standard corporate income tax. The repatriated funds are required to be held in special bank accou

29、nts for at least five years. The money cannot be invested in property or securitised property products. If the remitted funds are invested in specific industries, such as the “5+2” innovative industries (e.g., advanced technology, biotechnology, green energy, smart machinery, defence, plus high-valu

30、e agriculture and the circular economy), they are entitled to a further tax rebate of 50%, meaning that the tax rate will be lowered to 4% and 5% respectively, in the first and second year.According to the Ministry of Finance, the law is expected to attract a total of TWD800-900bn in investment. Thi

31、s is not the first time that the government has encouraged overseas Taiwanese business people to repatriate their offshore investments. In 2008, under President Ma Ying- jeou, the inheritance tax was lowered from 50% to 10%. However, without strict guidelines on the returning investments, some of th

32、ese funds were funnelled into real estate speculation, hence limiting the impact on the local economy.Why does it matter?With the repatriation of funds and Taiwanese firms building new local manufacturing facilities, we are already seeing investment activities pick up. In 9M19, Taiwans gross fixed c

33、apital formation (GFCF) accelerated to 10% y-o-y from an average growth of 3% in the past ten years (2009-18). HSBCs Economist, Julia Wang, noted stronger import growth in December 2019, which was primarily driven by machinery (18% of overall imports) and parts of electronic products (20% of overall

34、 imports), up 101% y-o-y and 15% y-o-y respectively. The strong growth in machinery imports points to firmer capex in the months ahead. This suggests the flow- back of investment, which was strong in 2019, will likely be put to use in 2020 and contribute more positively to growth (see Taiwan Trade a

35、nd Inflation data (December 2019): Some bright spots, 7 January 2020).Figure 2. Taiwan GFCF5,000,0004,500,0004,000,0003,500,0003,000,0002,500,0002,000,0001,500,0001,000,000500,000-(TWDm)20092010201120122013201420152016201720182019e 2020e25.0%20.0%15.0%10.0%5.0%0.0%-5.0%-10.0%-15.0%GFCF: Private ente

36、rprisesGFCF: Public enterprisesGFCF: GovernmentYoY (RHS)10-y avg. growth (RHS)Source: Taiwan Directorate General of Budget, Accounting and Statistics (DGBAS), HSBC. *Note: 2019e, 2020e estimates by DGBAS.Figure 3. Taiwan GDP comparison vs other major Asian economies2009201020112012201320142015201620

37、17201816.014.012.010.08.06.04.02.00.0-2.0-4.0TaiwanHKKoreaSingaporeSource: CEIC, Taiwan DGBAS, HSBCProperty market on the riseAccording to CBRE Taiwan, industrial property transactions increased 58% y-o-y to reach TWD49.46bn in 9M19, driven by demand from tech firms and developers. Local developers

38、accounted for 62% of the land transfers (or TWD10.9bn), which is the highest in a decade as they seek to take advantage of Taiwanese companies returning home amid the trade tensions. As a result, prices for industrial land increased 4.6% y-o-y in 1H19, with the steepest increases seen in central and

39、 northern Taiwan.The residential and commercial property markets are also staging a steady recovery aided by the low rate environment and growing demand from returning Taiwanese. On the residential market side, in 11M19, housing transactions in six major cities totalled 209,623 units, up 7.9% y-o-y,

40、 and are expected to reach the highest level since 2013, according to the Department ofLand Administration. Sinyi Residential Property Price Index, which tracks the secondary market, also rose to a five-year high in 4Q19. In terms of commercial property, CBRE Taiwan data showed that total office inv

41、estment turnover climbed by 100% y-o-y in 3Q19 to TWD6.89bn.Prime office yield rose slightly to 2.63% on the back of rising rental growth in 3Q19. We also see that the average office vacancy rate in the Xinyi-Jilong Area, Taipei, dropped to the lowest level at c6% in 3Q19.Figure 4. Taiwan property t

42、ransactionsFigure 5. Sinyi housing index of Taiwan500,000400,000300,000200,000100,000015%(building)6%10%5%0%-5%-10%-15%2010201120122013201420152016201720189M189M19-20%No. of Property Transaction in Taiwan (Buildings)YoY (RHS)350300250200150100Mar-07 Mar-09 Mar-11 Mar-13 Mar-15 Mar-17 Mar-19Source: T

43、EJ, HSBCSource: Sinyi, HSBCFigure 6. Office average vacancy rate in the Xinyi-Jilong Area, TaipeiFigure 7. Average rent in the Xinyi-Jilong Area, Taipei vs prime office yield20%16%12%8%4%0%1Q11 1Q12 1Q13 1Q14 1Q15 1Q16 1Q17 1Q18 1Q193,0002,8002,6002,4002,2002,0001,8001,6001Q11 1Q12 1Q13 1Q14 1Q15 1Q

44、16 1Q17 1Q181Q19Average rent (TWD/ping/mth)Prime office yield (RHS)4.0%3.5%3.0%2.5%2.0%1.5%1.0%Source: CBRE Taiwan, HSBCSource: CBRE Taiwan, HSBCAs the repatriation theme enters full swing in 2020, we think the property, infrastructure, financial, and retail sectors stand to benefit. Companies under

45、 coverage that are exposed to this theme include President Chain Store (PCSC, 2912 TT, CMP TWD310.5, Hold), Uni-President (UPE, 1216 TT, CMP TWD74.4, Buy), Far Eastern New Century (FENC, 1402 TT, CMP TWD29.5, Buy), CTBC FHC (2891 TT, CMP TWD22.6, Buy), and Asia Cement (ACC, 1102 TT, CMP TWD49.0, Buy

46、).What else to watch in 2020Will mainland China lift its individual travellers ban to Taiwan?On 1 August 2019, the Chinese government announced that it will stop issuing individual travel permits from 47 cities to Taiwan. Mainland China is Taiwans biggest source of tourists, accounting for 24% of al

47、l tourist arrivals in 2018. Since peaking in 2015 (at 40% of all tourist arrivals), the number of mainland Chinese tourists has dropped 35.6% to 2,696k in 2018.Following the ban, monthly average arriving mainland Chinese tourists plummeted by 32% since August 2019 compared with the monthly average i

48、n 2018. The November 2019 number sank to the lowest level (96,933) since January 2010, casting a pall over the 2020 outlook. Nevertheless, Taiwans tourism industry is small relative to other Asian economies, accounting for about c3% of GDP. We note that the ban on mainland tourists has not appeared

49、to dent the tourism sector thanks to a rise in arrivals from Korea, Japan and Southeast Asia. In fact, total arriving tourists still grew by 8% y-o-y in 11M19, while the hotel occupancy rate inched up to 59.8% in 10M19 from 58.1% in 2018. Nevertheless, should the ban be removed, a return of mainland

50、 tourists could rejuvenate the sector and benefit hotel operators, airlines and domestic retailers.Companies under coverage that are exposed to this theme include President Chain Store(2912 TT), Far Eastern New Century (1402 TT) and Uni-President (1216 TT).Figure 8. Tourists from mainland China to T

51、aiwan (yearly)Figure 9. Tourists from mainland China to Taiwan (monthly)4,5004,0003,5003,0002,5002,0001,5001,000500-250%(K person)6%200%150%100%50%0%2008200920102011201220132014201520162017201811M1811M19-50%350,000300,000250,000200,000150,000100,00050,000-(person)Jan-18 May-18 Sep-18 Jan-19 May-19 S

52、ep-19 Tourists from mainland China40%30%20%10%0%Tourists from mainland ChinaYoY (RHS) % of total tourists (RHS)Source: Tourism Bureau, Ministry of Transportation and Communications, HSBCSource: Tourism Bureau, Ministry of Transportation and Communications, HSBCFigure 10. Taiwan total tourist arrival

53、sFigure 11. Hotel occupancy rate in Taiwan8%12,00010,0008,0006,0004,0002,000-(K person)30%25%20%15%10%5%2008200920102011201220132014201520162017201811M1811M190%70.0(%)65.060.055.02008200920102011201220132014201520162017201810M1950.0Total touristsYoY (RHS)Source: Tourism Bureau, Ministry of Transport

54、ation and Communications, HSBCSource: Tourism Bureau, Ministry of Transportation and Communications, HSBCFigure 12. Number of visitor arrivals from mainland China Taiwan versus KoreaFigure 13. Growth of visitor arrivals from mainland China Taiwan versus Korea10,0008,0006,0004,0002,000-250%(K person)

55、200%150%100%50%0%-50%2008200920102011201220132014201520162017201811M1811M19-100%26%20092010201120122013201420152016201720186%11M1811M19TaiwanKoreaTaiwanKoreaSource: CEIC, HSBCSource: CEIC, HSBCAre changes coming for the ECFA?The ECFA (“Economic Cooperation Framework Agreement”) is a preferential tra

56、de agreement that was signed between Taiwan and mainland China in 2010. The agreement provided a foundation for future cross-Strait economic integration, laying out a roadmap for four subsequent agreements concerning investment protection, trade, services, and dispute settlement. The early harvest l

57、ist of tariff concessions includes 539 Taiwanese goods and 267 mainland Chinese goods. Tariffs of the goods are gradually reduced to 0% over a three-year period. Some examples of Taiwanese exports that have benefited from the ECFA include bicycles (original tariff at 13%), electric cookers (15%) and

58、 vinyl chloride (5.5%). We note that goods under the early harvest list have accounted for 24.2% of all exports to the mainland since 2011. Per government statistics, Taiwanese firms have saved an estimated USD6.89bn in tariffs on exports to mainland China from 2011 to July 2019 compared to a USD607

59、m tariff reduction on Chinese imports to Taiwan during the same period.Table 2. Taiwan exports to mainland ChinaYear Total goods Export value(USDbn)Growth rate Early Harvest goods Export valueEstimated tariff(USDbn)Growth rateexemption value (USDbn)201185.29.4%18.018.2%0.1201282.7-3.0%18.63.3%0.6201

60、384.11.8%20.610.6%0.7201484.70.7%21.12.5%0.8201573.4-13.4%19.0-9.8%0.8201673.90.7%19.10.6%0.9201789.020.4%22.718.9%1.1201896.88.7%23.63.9%1.27M1854.415.1%14.010.4%0.67M1949.9-8.3%11.6-16.9%0.6Estimated Tariff Exemption Value (2011 - 7M19)6.9Source: ECFA, HSBCOn 31 October 2019, China News reported t