Taiwan shares may see political pressure at 6,700 points

Taiwan share prices are expected to encounter selling pressure at around the key level of 6,700 points next week as political uncertainty continues to haunt the market, dealers said Friday.
They said with the sit-in protest approaching, investors may prefer to retreat from the trading floor on fears that political repercussions will impact on the market's performance.
Shih Ming-teh, former chairman of the ruling Democratic Progressive Party, is scheduled to lead an indefinite sit-in from September 9 in a campaign to oust President Chen Shui-bian over corruption allegations.
For the week to September 1, the weighted index closed up 125.24 points or 1.92 percent at 6,651.46 on a technical rebound after a 2.90 percent fall a week earlier.
Average daily turnover stood at 69.18 billion Taiwan dollars (2.10 billion US), compared with 69.02 billion dollars a week ago.
For the coming week dealers expect the market is expected to move between 6,500 points and 6,700 points. Concord Securities analyst Allen Lin said despite the recent rebound, the market remains technically weak.
"Daily turnover failed to expand in line with the gains, indicating a great number of investors were just watching how the planned sit-in will go. Non-economic factors still weigh a lot in the market," Lin said.
He said light trade is expected to make it difficult for the market to jump over the technical hurdles at around 6,700 points, adding only a steady daily turnover exceeding 100 billion dollars can push up prices.
Jacky Tam, an analyst with Yuanta Core Pacific Capital Management, said he expects the local bourse to drift without direction at the beginning as Wall Street is scheduled to close Monday for the Labour Day holiday.
"The US economy remains a concern to investors in Taiwan, in particular to foreign investors who have appeared cautious in recent sessions," Tam said.
Concord Securities' Lin said small caps such as integrated circuit designers and dynamic random access memory chip makers may benefit from their healthy fundamentals on current thin trade.