Taiwan share prices are expected to consolidate next week as market sentiment turns cautious after this week's heavy losses on inflation fears and steep falls on Wall Street, dealers said Friday.
Local investors would prefer to take to the sidelines after their foreign counterparts shifted to the sell side to pocket recent significant gains, they said.
It was also possible for the market to test the psychological level of 7,000 points again before stabilising to stage a meaningful comeback. The market is expected to move between 6,950 points and 7,200 points next week, they added. In the week to May 19, the weighted index closed down 204.81 points or 2.18 percent after a 1.24 percent decline a week earlier. Average daily turnover stood at 115.85 billion Taiwan dollars (3.63 billion US), following an average of 151.82 billion dollars a week ago.
"I expect the consolidation will continue until the end of this month at the least. It is technical in nature," Yuanta Core Pacific Capital Management analyst Jacky Tam said. Before the corrections seen this week and last week, the market rose almost 1,000 points in six weeks.
Tam said buying is likely to emerge starting from June as investors expect companies will come up with positive news in their scheduled annual general meetings to improve the market's mood.
Bentham Hung, an analyst with Fuh-Hwa Securities Investment and Trust, said investors were advised to watch closely the performance on Wall Street, which has been battered by concerns over possible further interest rate hikes.