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Investors remain hesitant in wake of plunge in PRC

"The market took a pause after yesterday's free fall, thanks to signs that [its] international counterparts seemed to have stabilized for now."

Alex Huang, Mega Securities Corp assistant vice president

Share prices closed 0.10 percent lower yesterday in reduced trade due to lingering caution over a still volatile global trading environment, sparked by sharp declines in China, dealers said.

The weighted index closed down 7.90 points at 7,670.77, off a low of 7,625.99 and a high of 7,695.15, on turnover of NT$116.59 billion (US$3.54 billion).

"The market took a pause after yesterday's free fall, thanks to signs that [its] international counterparts seemed to have stabilized for now," Mega Securities Corp (兆豐證券) assistant vice president Alex Huang (黃國偉) said.

The fact that US equities closed well off lows in the previous session helped underpin local sentiment following a sell-off by foreign investors here on Thursday, he said.

Investors will keep an eye on the US economic outlook while also paying special attention to whether the Chinese markets are about to stabilize or are facing another slump in the near term, he said.

Next week, the market is expected to continue its downside on fragile investor confidence after heavy losses this week, analysts said.

Concerns over further declines in the US and in the region remain in place as investors tend to trim holdings before these markets turn stable, they said.

It is possible for the market to stage limited technical rebounds during trade but selling may follow with small and medium-sized electronic stocks likely to suffer after their large cap counterparts suffered steep falls.

The market is expected to move between 7,500 points and 7,700 points next week, dealers said.

For this week, the weighted index closed down 1.78 percent at 7,670.77 after a 0.64 percent decline in the week to Feb. 14 before the Lunar New Year holidays.

Average daily turnover stood at NT$123.70 billion, compared with NT$82.31 billion.

"The market is technically weak after the index fell below the 60-day moving average at around 7,725 points. Further weakness is possible in a consolidation mode amid worries over market performances abroad," President Securities (統一證券) analyst Johnny Lee said.

Lee said with listed companies due to release their sales results for last month soon, few expect those results will help the market stage a comeback given the reduced number working days because of the holiday.

National Investment Trust (建弘投信) analyst Hank Chen agreed, saying the market is likely to test the key 7,500 point level before having a turnaround.

He expects selling will spread to small and medium sized electronic shares from large high-tech stocks amid sales concerns.
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