Taiwan share prices are expected to face more selling next week on weak confidence after the market hit a 21-month low amid a spike in international crude oil prices, dealers said on Friday. Lingering fears of further volatility on Wall Street are likely to keep haunting the local bourse and prompt foreign institutional investors to cut their positions, they said.
Many investors may take to the sidelines as they are closely watching how the bellwether electronic sector will fare as it is entering a peak season of the year, while the global economy is under threat of inflation, they said. The market is expected to fall, testing 6,900 points next week on margin calls, but a technical rebound is possible with a cap at around 7,400 points, dealers said.
The weighted index closed down 320.35 points or 4.24 percent over the week to 7,228.41 after a 4.48 percent fall a week earlier.
Average daily turnover stood at 99.81 billion dollars (3.28 billion US) compared with 100.20 billion dollars a week ago. "With the margin trade value still at a high level, the market remains unstable. After this week's heavy losses, the market has become even weaker technically," Concord Securities analyst Allen Lin said.
"As more and more foreign investors stand at the sell side, large-cap stocks which used to be foreign investors' favourites may encounter a steeper fall next week," Lin said.
Lin said he doubts the government will step in to support the market, preventing further losses. "Market weakness is a global phenomenon. It is not easy for any artificial support to reverse the trend," he said.
President Securities analyst Steven Huang agreed, saying he even expects the index will fall to 6,600 points soon. "The market needs more time to digest selling pressure. Before that, it is wise to hold a wait-and-see attitude," Huang said.
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