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Taiwan shares rise; investors should be cautious

  • By Chen Cheng-hui / Staff reporter

Taiwanese shares last week rose from the previous week in tandem with a rally of tech stocks on Wall Street, but investors should remain cautious about negative developments emerging from global markets while the local bourse is closed for the Lunar New Year holiday, analysts said.

Keeping as much cash in hand as possible is the safest choice, they said, advising to delay investments until the end of the holiday for a clearer picture of the global market.

The TAIEX closed at 14,824.13 points on Friday, a weekly increase of 3.14 percent and ranking third in Asia, behind a 4.20 percent rise in Seoul’s KOSPI and a 3.56 percent advance in Hong Kong’s Hang Seng Index.

Photo: Kelson Wang, Taipei Times

As daily stock turnover averaged below NT$200 billion (US$6.58 billion) last week, investors appear to remain wary of the risk of long holidays as well as the volatility of US stocks, SinoPac Securities Investment Service Corp (永豐投顧) said in a note on Friday.

However, the TAIEX has been able to defy market headwinds and stay firmly above the 14,000-point mark in recent sessions, despite the comparatively low rate of share transactions, SinoPac said.

The local bourse is scheduled to close from Wednesday to Jan. 29 for the Lunar New Year holiday. The long break coincides with the US earnings season and comes ahead of the US Federal Reserve’s meeting from Jan. 31 to Feb. 1.

The long holiday is expected to weigh on manufacturers’ sales performance as production lines would be closed for almost half a month, SinoPac said.

However, companies in tourism and consumption-related sectors should see sales increase significantly during the holiday, it added.

Allianz Global Investors Taiwan Ltd (安聯投信) said it expects Taiwanese equities to return to focus on fundamentals after the holiday in anticipation that the Fed’s next rate hike would be in line with market expectations.

Taishin Securities Investment Advisory Co (台新投顧) said the resumption of foreign purchasing of local shares would benefit liquidity momentum in the market.

Foreign institutional investors bought a net NT$88.98 billion of shares on the main board last week, following a net purchase of NT$6.61 billion the previous week, exchange data showed.

United Microelectronics Corp (聯電), Taiwan Semiconductor Manufacturing Co (台積電) and Shin Kong Financial Holding Co (新光金控) were the top three stocks bought by foreign institutional investors last week, the data showed.

However, local shares are likely to maintain a consolidation pattern ahead of the long holiday, even if buying interest picks up in domestic demand stocks, Taishin said.

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