Taiwan share prices are expected to correct next week after recent sustained gains, with investors likely to take profits and test the key 7,000 points support level, dealers said Friday.
They noted the market came off its highs in late trade Friday, which could indicate a build up of selling pressure after several winning weeks.
However, heavy losses are unlikely as foreign investors remain optimistic about the local bourse on expectations that Taiwan's economy will benefit from an increase in commercial exchanges with China after the mainland unveiled a series of measures to boost cross strait tourism and trade links.
The trading range is expected at between 7,000 and 7,160 points next week.
For the week to April 21, the weighted index closed up 140.51 points or 2.02 percent at 7,093.05 after a gain of 2.52 percent the previous week.
Average daily turnover stood at 136.89 billion Taiwan dollars (4.25 billion US), up from 107.33 billion dollars.
"It would be no surprise for the market to suffer a technical retreat after the recent significant performance," Yuanta Core Pacific Capital analyst Stanley Yeh said.
Before Friday's 0.14 percent decline, the market rose 11.6 percent in the preceeding four weeks.
"However, the downturn is expected to be a short-term phenomenon with the long-term uptrend remaining intact. The main driving force ... will be foreign capital inflows," Yeh said.
"While profit taking may eat away part of the recent gains, the market is expected to see quick rotational interest amid ample liquidity," he said. Allen Tseng, an analyst with Capital Securities, said he expects raw material stocks will suffer heavier selling pressure given the slide in underlying prices late this week.
"When investors want to lock in profit, any bit of negative information can be used as an excuse to sell," Tseng said.
Comments
Comments are closed.