Taiwan share prices are expected to consolidate next week after recent gains pushed the market to fresh seven-year highs and close to strong resistance at 9,000 points, dealers said on Friday. Concerns over further volatility on Wall Street are likely to keep many investors here on the sidelines, with investors needing a very strong lead if they are to go further, they said.
At the same time, since liquidity remains strong, any downside should be limited, with technical support at around 8,700 points. For the week to June 29, the weighted index added 70.30 points or 0.80 percent at 8,883.21 after a 2.79 percent gain the previous week.
Average daily turnover stood at 157.44 billion dollars (4.80 billion US), compared with 170.49 billion dollars. "Following the recent strong showing on the market, investors are looking for fresh incentives to trade with no breakthrough on Wall Street, however, the local market is unlikely to produce any surprises, positive or negative," Taiwan International Securities analyst Eric Lee said.
Lee said investors are pulling money out of electronic heavyweights amid fears that the sector will encounter a major technical setback after posting the most significant gains in the past few weeks. "Strong pressure is down the road as the market heads towards 9,000 points. I don't expect the bourse will jump over the high technical hurdles soon," he said.
However, Capital Securities analyst Huang Hsun-hui said the silver-lining is that funds leaving electronic sector may shift into more traditional companies, such as plastics and petrochemical manufacturers, property developers and China chips.
"The market is still full of liquidity. With no sign of leaving here, funds are expected to target stocks in the second or even third tiers," Huang said.
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