Taiwan share prices are expected to encounter resistance amid concerns over the global financial system ahead of a vote in the US needed to revive a bailout package, dealers said on Friday. Even if the rescue plan is passed in Congress, investors are still keeping their fingers crossed as they assess the outcome after the package is implemented, they said.
Dealers also remained worried about the domestic economy, as a tainted Chinese milk product scandal has further undermined the already weak local consumption, they added.
The market is expected to test 5,500 points again on economic concerns at home and abroad, while any technical rebound may be capped with the index moving closer to the key 6,000 point level, dealers said. In the week to October 3, the weighted index close down 187.40 points or 3.16 percent at 5,742.23 after a 0.68 percent fall a week earlier. Average turnover stood at 66.51 billion Taiwan dollars (2.07 billion US), compared with 88.72 billion dollars a week ago.
"The reduced trading volume showed weak market confidence as global financial woes continue to haunt investors here," President Securities analyst Steven Huang said. "Few can be sure whether the US rescue plan will effectively stem the difficulties in the banking system even if it gets approved. We are at a critical moment," Huang said. Huang added that while government-controlled funds may step in to support share prices in case of market turbulence, foreign institutional investors still stand on the sell side.
"It is unlikely for the market to get out of the current consolidation mode anytime soon. Investors had better raise cash positions to more than 50 percent of their portfolios for now," Huang said.
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