Taiwan share prices are expected to benefit from adequate liquidity next week with buying interest rotating to the bellwether electronic sector, dealers said Friday.
Although Wall Street saw negative impact from deteriorating profitability of financial stocks on subprime problems, NASDAQ, which has high correlation with their local counterparts here, demonstrated its resilience to lend further support to electronic shares, they said.
However, as the market is moving closer to this year's high of 9,807 points, selling is likely to surface to cap upside next week, while it is unlikely to fall below 9,400 points on rotational buying, they added.
For the week to October 19, the weighted index closed up 115.25 points or 1.21 percent at 9,611.72 after a 1.26 percent fall a week earlier. Average daily turnover stood at 146.24 billion Taiwan dollars (4.50 billion US), compared with 156.75 billion dollars a week ago. "High liquidity is helpful for the market to challenge the 9,807 point high (seen in late July) soon," Mega Securities analyst Alex Huang said.
To his estimate, Huang said nearly 90 billion dollars, including some 40 billion dollars worth of government funds and 29 billion dollars raised by local institutional investors, are set to enter the market. "Funds are sufficient to boost heavyweighted electronic stocks which will no doubt serve as a key to lift the broader market to the recent high," Huang said.
An analyst with a regional brokerage who asked not to be named said he expects some technical selling to emerge in the first half of next week with the index approaching 9,807 points.
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