Taiwan shares expected to move higher

Taiwan shares are likely to move higher next week, supported by rotational play after the market finally recovered the 6,000 points level on hopes of a traditional January rally, dealers said Friday.
They said concerns over a possible fresh Sars outbreak and terror attacks have eased but they remain clearly in the background while there could be strong resistance at 6,200 points ahead of the week-long Lunar New Year holidays which begin on January 19.
Anticipation of a traditional early upturn and ample liquidity have bolstered sentiment, pushing the weighted index up 184.35 points or 3.15 percent over the week to close at 6,041.56 Friday after a 1.7-percent rise in the previous week.
Grand Cathay Securities Corp assistant vice president Sean Liu said the upward trend would continue in the coming week to make up for the losses resulting from the Sars and terror alerts in the past few weeks.
"It appears that these worries are over now and it's time to catch up with Wall Street," he said.
The Dow closed Wednesday at a year high of 10,453.92 points after gaining 28.88 points on the final day. It has been on a rising streak for five consecutive weeks.
The tech-heavy Nasdaq, up in four of the past five weeks, ended down 6.51 points at 2,003.37 against Tuesday's year-high of 2,009.88.
Polaris-Protime Securities Consultant manager Jerry Cheng said he expects rotational play to dominate the market, mainly among old-economy shares.
"There is more room for these shares to grow compared to the technology sector," which registered hefty gains last year, he said.
Retail investors will likely continue to chase prices higher on anticipation of a January rally as fund managers build positions at the start of a new year, Liu said.
He said foreign fund managers in particularly may be eager to boost prices in order to offset losses due to jitters over growing tensions with Beijing and Washington after President Chen Shui-bian unveiled his plans for a controversial referendum.
However, Cheng said profit-taking might emerge at the 6,200 point level with many investors ready to cash out if they can make up for their losses.
Political uncertainty ahead of the presidential elections on March 20 would continue to put a lid on the market's gains, he said.
"Investors are likely to be cautious until after the elections," said Cheng, who expects the market to trade between 6,000 and 6,150 points the near term.