Beyond 9,000 points, TAIEX could move higher: analysts
May 25, 2014, 12:00 am TWN
TAIPEI, Taiwan -- Shares in Taiwan are likely to move even higher in the future on the back of ample liquidity after the weighted index on the Taiwan Stock Exchange closed at an almost-three-year high, breaching 9,000 points Friday, market analysts said.
They said that with foreign institutional buying expected to continue, the local bourse is likely to keep an uptrend in the longer term, although the index could encounter some short-term technical resistance after recent significant gains.
The weighted index closed up 38.59 points or 0.43 percent to close at 9,008.22 points, the highest level since June 7, 2011, when the index ended at 9,057.10, as buying focused on the bellwether electronics sector, in particular Apple concept stocks, as well as the financial sector.
Shares of smartphone camera lens supplier Largan Precision Co., a barometer to the broader market, closed up 4.79 percent at NT$2,080.00 (US$68.87), a record high in the company's history.
Friday's gains on the broader market resulted from follow-through buying seen a session earlier, when the index closed up 1.2 percent.
David Chu, chairman of Hua Nan Securities Investment Management, said the latest gains in the index have boosted not only foreign institutional investors' sentiments but also local investors' confidence in the market outlook.
Chu said that as the U.S. Federal Reserve is in no hurry to raise its key interest rates to maintain a loose monetary policy, fund spill-over effects are expected to continue to drive up other markets, including Taiwan.
Lin Cheng-yin, vice president of online investment consultant caizischool.com, said foreign institutional investors still own a large chunk of long position contracts in the futures market so that they could continue to push up the spot market to profit in futures.
Lin said investors' faith in the local economy has strengthened after Taiwan reported that export orders in April grew 8.9 percent from a year earlier, the third consecutive month with year-on-year growth in export orders.
He said export orders could continue to grow in May and June so that foreign institutional investors are expected to seize the positive economic factor to chase share prices.
However, as the index is expected to challenge 9,022 points, a recent intra-day high, some profit taking could emerge to pull back share prices in the short term, Jih Sun Investment Consulting said.