Taiwan shares are expected to consolidate around current levels next week as investors keep to the sidelines amid political uncertainties ahead of local elections on December 3, dealers said.
While foreign investors may continue on the buy side, taking advantage of relatively low valuations in what has been a laggard market in the region, local institutional and retail investors are likely to bide their time.
The current trading range is between 6,000 points and 6,200 points and this will likely continue to the case in the coming week.
For the week to November 25, the weighted index closed up 21.46 points or 0.35 percent at 6,128.20 after an increase of 0.52 percent a week earlier.
During the same period, average daily turnover stood at 76.47 billion Taiwan dollars (2.28 billion US), following 80.57 billion dollars the previous week.
"As opposed to foreign buyers, local investors, both retail and institutional ones, have showed hesitation during this week as the elections are approaching. Such cautious sentiment is expected to dominate trading this week," said Johnny Lee, an analyst with President Securities.
On December 3, voters will go to the polls to elect local government chiefs and assembly members following heated campaigning between the ruling Democratic Progressive Party and main opposition Kuomintang. "The upcoming elections have been watched closely. Political uncertainty has made the atmosphere anxious enough to affect the market," Lee said.
A dealer with a European securities house said foreign funds are expected to dominate the local bourse this week.
Heavyweights Taiwan Semiconductor Manufacturing Co and United Microelectronics Corp are also expected to benefit from healthy fundamentals, the dealer added.