Taiwan share prices are expected to test the key 8,000 point support level on further foreign selling amid lingering concerns over a possible global credit crunch from sub-prime mortgage problems in the US, dealers said Friday.
If the market falls below 8,000 points, then already fragile investor confidence would likely dip to a new low, triggering more pressure, they said. However, the electronic and financial sectors - a pillar of foreign investor portfolios - would continue to be targeted at cheaper levels.
For the week to August 17, the weighted index closed down 841.02 points or 9.42 percent at 8,090.29 after a 1.40 percent decline a week earlier. Average daily turnover stood at 162.07 billion Taiwan dollars (4.90 billion US), compared with 152.05 billion dollars a week earlier.
The market is expected to move between 7,800 points and 8,200 next week. "It remains to be seen how the US housing mortgage problems will develop. Uncertainty is the last thing the market wants to embrace," Capital Securities analyst Huang Hsun-hui said.
"As long as Wall Street keeps an unstable course and suffers more losses, there is no way for global markets, including Taipei, to stop bleeding," Huang said. Huang said foreign investors were expected to continue sell-off their holdings to meet demand for fund redemption after Wall Street falls.
Foreign investors sold a net of more than 98 billion dollars this week. "Investors better keep alert as the market moves close to 8,000 points. If the market fails to hold itself above that level, the lower 7,800 point level could be seen," he said.
However, National Investment Trust analyst Hank Chen said he had not ruled out a possible technical rebound during the week, given the extent of recent steep falls. The market has fallen almost 17 percent since late July.
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