The stock market mounted a strong rebound for the second straight day yesterday, gaining 187.02 points, or 3.99 percent, to close at 4,870.66 on government intervention and Wall Street rallies, analysts said.
Turnover expanded to NT$86.8 billion (US$2.63 billion), the biggest amount this month, with 277 stocks closing limit up and 25 limit down, Taiwan Stock Exchange Corp data showed.
Alan Tseng (曾炎裕), an analyst at Capital Securities Corp (群益證券), branded the rally a technical rebound attributable chiefly to the government’s use of the National Stabilization Fund to boost the monthly TAIEX performance figures.
“The government appeared to become more active and dumped more funds into the local bourse these days after being blamed for ineptitude in shoring up the market,” Tseng said by telephone. “Investors who buy now are likely to be trapped as the economic fundamentals remain unchanged.”
Institutional fund managers purchased a net NT$3.19 billion in local shares, notably in Taiwan Semiconductor Manufacturing Co (台積電), United Microelectronics Corp (聯電), Formosa Plastics Corp (台塑) and Chunghwa Telecom Co (中華電信) stocks whose prices were deemed to be unfairly low, Tseng said.
The analyst said the rebound was a short-lived phenomenon that was expected to lose ground next week.
“Granted Wall Street is relatively stable this week,” Tseng said. “But investors seeking short-term profits will dispose of their shares before it is too late.”
Altogether, the TAIEX rose 291 points, or 6.4 percent, this week. Still it shed 848 points, or 14.8 percent, from September when the index declined 18.8 percent.
Winson Wang (王榮旭), an analyst at Marbo Securities Consultant Co (萬寶證券投顧), agreed that the local bourse would remain volatile next week when the index was expected to witness drastic fluctuations.
The Directorate General of Budget, Accounting and Statistics and the Ministry of Finance are scheduled to publish the latest figures on consumer prices and exports on Wednesday and Friday.
“Chances are key economic pointers will post disappointing showings when they are unveiled next week,” Wang said by telephone.
The rebound in equity markets, however, failed to benefit the local currency as the New Taiwan dollar dropped 0.6 percent to trade at NT$33 per US dollar, following a rare pickup of 1.5 percent a day earlier.
Turnover on the Taipei Forex Inc was at US$1.137 billion, while turnover was US$498.5 million on the smaller Cosmos Foreign Exchange.
A trader at the Union Bank of Taiwan (聯邦銀行) said the NT dollar’s weakening fell in line with the nation’s economic outlook and the rebound on Thursday went overboard.
“There is little room for the NT dollar to strengthen in light of the nation’s economic state,” the currency dealer said on condition of anonymity. “The currency appreciated too much on Thursday, which accounted for the downward adjustment today.”
The trader said the NT dollar would continue to devalue until it hit NT$33.5 against the greenback, with sporadic rallies in between. It gained 1.2 percent this week.
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