The TAIEX could face a downward correction this week, testing its previous low of 7,032 points recorded on May 25, following the US Dow Jones Industrial Average’s drop below the 10,000 point on Friday, analysts said yesterday.
“In line with global market fluctuations, the TAIEX is not completely out of the woods in spite of the local bourse’s earlier rebound [last week],” Jih Sun Securities Investment Trust Co (日盛投信) chief investment officer Chang Tao-lang (張島郎) said in a Central News Agency report.
Amid pessimistic market sentiment, the TAIEX will see further drag from the launch of this year’s World Cup, which will likely distract foreign investors, as well as uncertain progress on negotiations on a potential trade pact between Taiwan and China, the report cited HSBC Taiwan Phoenix Fund manager Huang Shih-chia (黃世洽) as saying.
Meanwhile, central bank data showed that the growth of M1B, a narrow measure of money supply that includes currency held by the public and deposits, declined for four consecutive month to 17.92 percent in April from a year earlier, indicating that the nation’s accumulated liquidity has eased, Huang said.
The local benchmark could drop to the 7,000 point level, but will find a strong bolster between 6,800 and 6,900 points, Polaris Securities Co (寶來證券) president Yao Ya-chen (姚亞承) told the United Evening News yesterday.
As the nation’s economic fundamentals remain healthy, the value of domestic shares will be of great interest if the benchmark index does plunge below 7,000 points, he added.
“Excellent mid-term buying opportunities will emerge,” the report quoted him as saying.
Yao recommended shares in financial, aviation, mid-cap IC design sectors and companies, the latter of which will likely benefit from Chinese demand as Beijing authorities will soon announce the country’s five-year plan to double its salary level.
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