Taiwan share prices are expected to extend recent gains but room for any further upside may be limited by technical factors after the latest rally, dealers said on Friday.
Foreign investors remain major players in the market, continuing to seek laggards in the non high-tech sector, and in turn, local retail investors are likely to follow suit, they said.
Concerns over volatility in the Chinese markets after a recent downturn, however, may lead to some caution, while June sales reports are unlikely to be impressive and could push many investors into the sidelines. For the week to July 6, the weighted index closed up 305.10 points or 3.43 percent at 9,188.31. Resistance is seen at 9,300 points while current liquidity levels should be capable of supporting the market at 9,100 points.
Average daily turnover for the week stood at 183.82 billion Taiwan dollars (5.60 billion US) compared with 157.44 billion dollars a week earlier. "This is a completely liquidity driven market. As the market remains full of funds, I cannot figure out why the market will stop from steaming ahead now," Yuanta Core Pacific Capital Management analyst Jacky Tam said.
After the government released details of four major urban renewal projects, Tam said, investors appeared bullish with the market hitting seven-year highs and pushing daily volumes higher in the past few weeks.
"Investors, in particular foreigners, are more willing to build positions," Tam said. However, Concord Securities analyst Allen Lin said investors had better watch out for any possible technical pullback.
"Since the end of May, the market has risen almost 13 percent. It is quite staggering. Even if the weighted index continues to go higher, the gains are unlikely to impress investors," Lin said.
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