Taiwan share prices are expected to extend gains on technical factors after recent heavy losses, amid hopes the Federal Reserve will cut interest rates to boost the US economy, dealers said on Friday.
Rotational buying was likely to dominate, focusing on the financial sector, conglomerates and old-economy industrial stocks which have appeared oversold, they said. However, as the market approaches the crucial 9,000 point level, profit taking may surface to limit upside, they added.
The market was expected to move between 8,650 points and 8,950 points next week. For the week to December 7, the weighted index closed up 135.98 points or 1.58 percent at 8,722.88 after a 2.93 percent increase a week ago.
Average daily turnover stood at 108.92 billion Taiwan dollars (3.37 billion US), compared with 114.96 billion dollars a week earlier. "The current technical rebound is not done yet. Aided by expectations of further interest rate cuts by the Fed, technical factors are expected to continue into next week," Capital Securities analyst Huang Hsun-hui said.
The Fed has scheduled its next policy-making meeting for December 11. Huang said as Wall Street turns stable, some foreign institutional investors are shifting to the buy side to hunt bargains in the local market, while local retail investors may follow suit.
But, even if the market is bolstered by technical factors, it is hard for the weighted index to challenge 9,000 points next week, Huang said.
"Daily turnover is on the decline, showing that many investors remain on the sidelines and are waiting for more indications on the US economic outlook," Huang said. "The market needs some time to consolidate before jumping over the 9,000 point hurdles. Be patient," he added.
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