Taiwan's Consumer Discretionary sector is expected to navigate through cyclical headwinds, with sales growth for Taiwan Apparel and Footwear estimated to accelerate to 32% in 2H22. However, the sector has been priced for substantial earnings downside, with a 27% correction year to date. The correction was mainly triggered by earlier and more conservative guidance by apparel OEMs and concerns over slower US housing markets for Nien Made. Despite this, the sector is expected to see better earnings momentum into 3Q21, with solid pricing and the ability for some OEMs to pass through higher costs mitigating pressure into 2H22. Additionally, favourable FX is expected to provide additional tailwinds.
