Taiwan shares are expected to be volatile as the market moves closer to the nearest resistance level of around 4,700 points, dealers said on Friday. Many investors would like to remain sidelined, watching closely how Wall Street performs amid caution over the effects of a massive US economic stimulus package, they said.
However, adequate liquidity is likely to lend support to the broader market, with foreign institutional investors continuing to rebuild their positions by targeting the bellwether electronics sector, they added. The market is expected to pull back after jumping above the 4,700 point mark, while there may be a floor at around 4,300-4,400 points, according to dealers. In the week to February 13, the weighted index rose 119.25 points or 2.67 percent to 4,590.50 after a 5.26 percent increase from a week earlier.
Average daily turnover stood at 73.60 billion Taiwan dollars (2.16 billion US), compared with 59.76 billion dollars a week ago. President Securities analyst Steven Huang said the bourse has staged a significant comeback after investors returned to the trading floor from the Lunar New Year holiday ending on February 1.
"The market is faced with stiffer resistance as it moves ahead. Investors have turned more and more cautious," Huang said. Huang said few can be sure whether and how Wall Street will stabilise amid lingering concerns over a global economic meltdown.
"Uncertainty over Wall Street could continue to dictate the local bourse. Investors may prefer to pocket profit after the market made such strong gains in the past two weeks," Huang said.
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