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Fund-outflow fears unsettle market as US assets beckon

Share prices closed 0.12 percent higher yesterday in a thin, mixed market as select positive industry leads were offset by concerns over a possible outflow of funds as the US dollar continued to firm, dealers said.

They said foreign investors may be tempted to move their funds out of the local market as a stronger US dollar and the prospect of higher US interest rates made US assets more attractive.

The weighted index rose 6.86 points at 5,942.85, on turnover of NT$44.01 billion (US$1.37 billion).

Decliners led gainers 449 to 262, while 176 stocks were unchanged.

The cement sector was up 1.36 percent, followed by electronics with a gain of 0.34 percent and financials up 0.1 percent.

"Some got a lift from positive industry factors and some attracted bargain-hunting," said Frank Lin, senior vice president at Fubon Securities Co (富邦證券). "But the market was generally quiet due to concerns about hot money moving out of Asia [if the US dollar appreciated following further interest-rate rises]."

Selected funds were still parked in Chinese yuan-denominated assets, negatively affecting sentiment for the local bourse, Lin added.

Airline stocks out-performed the broader market on a report that China had agreed in principle to open direct cross-strait charter flights during next month's Lunar New Year holidays, dealers said.

Barro Liao (廖國峰), a fund manager at PCA Securities Investment Trust Co in Taipei, said "the bigger issue is [whether] it will ease cross-strait tensions."

China Airlines (華航) closed up NT$0.3 at NT$18.3, while EVA Airways (長榮航空) gained NT$0.2 at NT$15.9.
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