Taiwan stocks are likely to head higher this week as the long-suffering tech sector gets a chance to replace industrial shares in the limelight after surviving earnings season without major negative surprises. The TAIEX share index rose 1.19 percent to close at 5,705.93 last week, after trading was shortened to four sessions following a market holiday on Monday due to Typhoon Nock-Ten.
Trading ended on an upbeat note on Friday edging 0.18 percent per cent higher as gains in major electronics shares offset sharp losses in industrial shares following a surprise interest rate hike by China's central bank.
"We think the electronics rebound should have staying power, but it will heat up slowly," said Alex Huang, vice president of Barits International Securities.
Huang said he expected the TAIEX to rebound as high as 5,850 before settling into consolidation, with foreign investors boosting index heavyweights like Taiwan Semiconductor Manufacturing Co (TSMC) and Hon Hai Precision Industries.
Most tech shares posted weak quarterly results or forecasted a slowdown in the final months of the year last week as a consumer-driven electronics boom sputtered out, but the downturn has long been priced into the sector's shares, analysts say.
Industrials are set to continue falling out of favour, though analysts say blue chips like top steelmaker China Steel should feel less pain than second-tier firms such as Tung Ho Steel.
Banking shares should also win a bigger position in fund managers' portfolios as the government encourages a second wave of merger and acquisitions in the crowded sector.
With little evidence of wrongdoing by the Chen campaign, emerging from the case, markets expect judges to rule against the opposition, analysts say.
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