Reacting to a downward decline in the US NASDAQ, the TAIEX took a heavy dip at the opening bell, only to recover above the 6,000 point level.
The US stock market dropped Wednesday following political uncertainty from an unconcluded presidential election.
After taking an initial blow, the TAIEX finally managed to recover from a decline of 140 points -- its low in the day -- by rising 21.61 points to closed at 6,089.55 points, on turnover of NT$118.3 billion.
This is the third trading day that turnover topped NT$100 billion in more than three months. Analysts said that the TAIEX is now likely to stay on the up-trend in the near-term with 6500 the next target point.
Foreign investors continued their buying spree yesterday purchasing a net NT$1.24 billion worth of shares, down from Wednesday's net of NT$4.4 billion. Through yesterday, foreign investors had bought a net of NT$34.3 billion worth of shares this month.
"Since the TAIEX has broken through the 6,000 point level, foreign investor buying is likely to slow down," said Nathan E. Emerson, president of ABN AMRO Securities in Taipei.
"I expect the TAIEX will consolidate around 6,000 points for a few days and continue towards 6,500 points later this month," said Liu Kai-pin (
"However, when it reaches 6,500 points, a considerable correction can be expected."
After the NASDAQ Index dropped 184 points on Wednesday, the fall made local electronics shares hesitate at the opening yesterday. But strong buying on Morgan Stanley Capital International Indices-related shares and DRAM shares later pushed the market back to its highest daily level when the TAIEX closed up 21 points.
Meanwhile, government officials said the state funds have no plans to sell their shareholdings in the market.
"The National Stabilization Fund (
The Hong Kong government established a mutual fund after it intervened with its stock market during the 1997 financial crisis. But analysts said it might not be the best way to unload the shareholdings by the stabilization fund, analysts said.
"Since the investment of the stabilization fund has been concentrated in high-tech shares like Taiwan Semiconductor Manufacturing Co (台積電) and United Microelectronics Co (聯電), it's a smart way to unload its shareholding by issuing GDRs," said Liu.
"If the stabilization fund sold its shareholding through a mutual fund, it would absorb local capital directly. But if it sells through GDRs, it would have minor impact on the domestic capital market.
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