Taiwan stocks are unlikely to attract bargain hunters this week despite a slide to tempting levels as weakening monthly revenue figures and fears of cautious forecasts on third quarter results keep investors sidelined.
The TAIEX share index gained 0.91 percent last week to end at 5,399.16, with most of the action taking place on Thursday when it fell 1 percent to a one-year intra-day low then suddenly reversed course to end 2.08 percent higher.
Turnover also swelled to more than T$70 billion in each of the last two sessions of the week after mostly hovering around T$40-45 billion, suggesting that investors were starting to show real bargain-hunting interest, particularly in technology shares.
"I think we saw that there are a group of investors out there that are willing to gamble on the market now," said Richard Tsai, senior vice president in charge of research at Grand Cathay Securities.
Taiwan firms are required to report second-quarter results before the end of August and many electronics firms have already reported record-high sales and earnings.
However, some have warned of unsold inventory at customer warehouses as clients overestimated demand, which could hurt revenues in the July-September quarter as stockpiles are gradually digested.
Chi Mei Optoelectronics, Taiwan's second-largest display screen maker, posted all-time high profits for the April-June quarter last week, but also warned it expected average selling prices to drop 15-20 percent in the third quarter.
The company's July revenues, announced after the market close on Friday, bore out the bearish forecast with a 21.6 percent drop from June.
Mediatek Inc, Taiwan's largest microchip designer, also showed a 7.9 percent dip from June, contradicting the chip industry's usual pattern of a pick-up in July as orders to meet back-to-school and year-end holiday demand flow in.
Taiwan tech stocks may also be off to a weak start on Monday after weak US jobs data battered their US counterparts. The Philadelphia Stock Exchange index of semiconductor shares tumbled 3.85 percent in Friday's session.
Comments
Comments are closed.