Taiwan share prices are expected to encounter selling as the market moves closer to the nearest resistance level of 7,600 points after a recent strong showing, dealers said on Friday. Pressure is likely to focus on electronics which have scored the largest gains with foreign institutional investors building up their positions, they said.
Dealers will watch closely how Wall Street performs following recent significant gains amid fears that any downside in US market will impact the local bourse, they added.
While the room for the market is expected to be limited next week, selling may be abating before technical support at around 7,100, dealers said. For the week to September 18, the weighted index rose 189.41 points or 2.58 percent to 7,526.55 after a 2.57 percent increase a week earlier.
Average daily turnover stood at 116.70 billion Taiwan dollars (3.60 billion US), compared with 135.79 billion dollars a week ago. Since the beginning of this month, the bourse has risen about 10 percent as foreign investors keep putting funds into the island.
"It is time for the market to take a breather. Otherwise, overshooting may lead to a major correction," Concord Securities analyst Allen Lin said. As liquidity remains high on a stronger local currency, rotational interest could turn active to boost small and medium cap stocks.
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