Taiwan stocks are expected to stabilise this week after falling 8 percent so far this month to touch a near 1-year low last week on worries over the outlook for the tech industry.
Taiwan's main TAIEX share index fell 2.3 percent to end the week at 5,373.85 - but halving the losses in the previous week - as microchip heavyweights such as Taiwan Semiconductor Manufacturing Co (TSMC) halted falls.
The tech sector subindex, the main index's most heavily weighted subindex, has plunged 26 percent over the past three months as investment houses have lined up to downgrade the island's makers of computer screens and microchips.
The focus will be on microchip heavyweights Taiwan Semiconductor Manufacturing Co and rival United Microelectronics Corp, which are expected to post strong quarterly profits this week.
Smith Barney downgraded the two chipmakers to "sell" from "buy" recently, saying there was little probability for their shares to rise.
Analysts said sentiment would be bolstered by strong export order and industrial output data released late on Friday, but the market would need time to recover from the recent losses.
"Some shares have fallen a great deal lately, especially tech issues. It may be too early for many investors to jump back into the market," said Albert Lin, Hotung Securities' research head.
Analysts said short positions had been reduced by at least T$15 billion during last week's decline, easing the selling pressure as most of the selling occurred in the first part of the week.
Taiwan's export orders in June jumped 28 percent to $17.7 billion, beating market estimates of $17.1 billion, while industrial output rose a stronger-than-expected 15.7 percent.
Adding to pressures are nagging worries about US corporate earnings and high oil prices, which are expected to see Wall Street tread cautiously next week.
Recent selling in display makers such as AU Optronics Corp, the world's third-largest maker of liquid-crystal displays (LCDs), and Chi Mei Optoelectronics Corp, the fourth, could slow after a sharp correction.
AU shares have lost almost half of their value since a 2004 high of T$74.8 was reached in mid-April, while Chi Mei shares have been only marginally better. Both shares ended with modest gains on Friday.
While doubts remain about demand for thin-screen televisions in the second half, AU posted last week record quarterly profits, while smaller rival Chunghwa Picture Tubes Ltd is expected to reveal similarly strong results this week.
With trading volume keeping investors on the sidelines, some investors have begun to delve into industrials in recent trading. The paper subindex rose 2.42 percent, while the steel subindex dropped 5 percent on Friday.
Comments
Comments are closed.