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Government help thought to play part in technical rebound

Shares closed 0.37 percent higher yesterday on a technical rebound after the government apparently lent support to the market, dealers said.

But they said that gains were capped by ongoing concerns about the US economy.

"Government support must have helped underpin the market today," said Oliver Fang, assistant vice president at Yuanta Core Pacific Securities (元大京華證券).

"Bargain hunting by small investors ... played a lesser role," he said.

Investors refrained from heavy buying after US Federal Reserve Chairman Ben Bernanke cautioned that economic growth would slow noticeably in coming months, they said.

The TAIEX closed up 33.34 points, or 0.37 percent, at 8,970.92, off a low of 8,853.81 and a high of 9,016.73 on turnover of NT$154.44 billion (US$4.8 billion).

Decliners led risers 1,163 to 944, with 271 stocks unchanged.

For the week, the weighted index closed down 302.17 points, or 3.26 percent, after a 3.72 percent fall a week earlier.

Average daily turnover stood at NT$153.92 billion, down from NT$175.94 billion a week ago.

The decline in margin lending positions meant many investors were scared enough to cash out of the market, Fang said.

There was reason to believe that government funds bought into market heavyweights such as Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) to lend support to the market and boost the Democratic Progressive Party's chances in next year's elections, he said.

However, that would not prevent the market from remaining vulnerable to further volatility on Wall Street, Fang said.
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