Taiwan share prices are expected to continue firmer this week on hopes for better ties with China and an increase in foreign investor support, dealers said. They said investors have been buoyed by the positive welcome given by China to first opposition Kuomintang (National Party) head Lien Chan and now James Soong of the People First Party, wanting to believe that their visits will see improved ties with Beijing. At the same time, recent foreign investor interest should be sustained ahead of the expected increase in Taiwan's weighting in its indices by Morgan Stanley Capital International (MSCI).
The MSCI indices are closely followed, especially by institutional investors, and so an increased weighting would normally see fund managers increase their exposure.
Dealers said electronics stocks, mainly digital camera, mobile phone and computer makers, could attract bargain hunters as the market looks ahead to a seasonal pick up after a traditionally flat first half of the year.
For the week to May 6, the weighted price index gained 149.89 points or 2.58 percent to 5,967.96 points following a 1.24 percent rise the previous week. Average daily turnover rose to 70.48 billion Taiwan dollars (2.26 billion US) from 47.96 billion dollars.
Daniel Tseng, an analyst at Fubon Securities Investment Services, said the trips to China by Lien and then Soong "raised hopes for better cross-strait relations and boosted confidence in the bourse.
"I am hopeful that the market can reach the key 6,000 points level but probably fall short of 6,100 as it is still up to the government, not the opposition, to facilitate developments in cross-strait affairs," he said. Tseng said foreign fund inflows have started to pick up ahead of the MSCI move later this month.
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