Cautious sentiment is expected to affect Taiwan shares as the pro-independence opposition protests this weekend against the China-friendly Kuomintang government, dealers said on Friday. Worries linger over a possible prolonged stand-off and even violence as the opposition Democratic Progressive Party also plans an all-night sit-in protest in front of the presidential office, they said.
"Political conflicts are the last thing the stock market wants to have," Grand Cathay Securities analyst Mars Hsu said. Investors are also keeping a close eye on first quarter gross domestic product data scheduled for release on May 21, and waiting for government comments on the economic outlook for the rest of the year, they added.
The market is expected to face stiff technical barriers as it moves closer to 6,500-6,600 points next week, while ample liquidity may lend some support to prices at around 6,300, dealers said. In the week to May 15, the weighted index fell 94.78 points or 1.44 percent to 6,489.09 after a 9.86 percent increase the previous week.
Average daily turnover stood at 170.52 billion Taiwan dollars (5.18 billion US), compared with 211.87 billion dollars a week ago. Cross strait ties have massively improved after the Ma Ying-jeou took office last May, but the opposition has claimed close relations with Beijing have hurt Taiwan's sovereignty.
Hsu said the market's recent significant gains have paved the way for volatility in the short term. "Many investors may use such political factors as an excuse to cut positions for profit," Hsu said. President Securities analyst Steven Huang said he expects share prices may be pressed in the first half of next week, but it is possible for a technical rebound in the second half as political factors are cleared.