The TAIEX rose slightly last week from the previous week as the government sped up the creation of a capital gains tax on securities investments that helped clear uncertainty in the market. Equity strategists said shares were likely to stay in a narrow trading range in the near-term, as investors remain cautious about corporate earnings and economic fundamentals.
Henry Chen (陳志恆), a Taipei-based analyst and former investment research head at Value Partners Concord Asset Management Co (惠理康和投信), said the main bourse had been under pressure in recent trading sessions because of a number of negative factors.
These included external uncertainties over debt problems in Europe and a rocket launch in North Korea, as well as domestic worries about the capital gains tax and hikes in fuel prices and electricity rates, Chen said in an e-mailed statement on Friday.
“However, there were signs that the TAIEX gained support from government-run funds in recent sessions whenever shares moved lower at the opening,” Chen said, adding that strong technical support might be seen at levels near 7,500 points.
The TAIEX rose 1.06 percent last week and closed at 7,788.27 points in Friday trading, compared with a decline of 2.86 percent the previous week. The average daily turnover was about NT$72.01 billion last week, 18.04 percent less than NT$87.85 billion the week before, data from the Taiwan Stock Exchange showed.
While the benchmark index has increased 10.13 percent since the beginning of the year, it has pulled back 4.1 percent over the past month, after increasing 8.45 percent in the previous three months, suggesting a near-term consolidation is likely to take place soon, analysts said.
Chen Ming-xun (陳明勛), a fund manager at Prudential Financial Securities Investment Trust Enterprise Co (保德信投信), said he expects investors’ focus this week to shift from the issue of a capital gains tax to global macroeconomic health and the performance of local electronics makers as the season of new product launches gets under way this quarter.
“Local PC makers are expected to see restocking demand in the second quarter, after they posted better-than-expected shipments in the first quarter,” the analyst said in a note.
Most of the restocking orders are being driven by the launch of new Ultrabook computers by major brands and the introduction of new Ivy Bridge chips by Intel Corp, he said.
Companies in the LED industry are also likely to see a share-price spike in the short term because of the continuing rise in penetration rates of LED TVs worldwide and a renewed effort by the Chinese government to promote LED lighting, he said, adding that the April-to-June period is traditionally a hot season for the industry.
Shares in the green-energy sector, such as LED and solar power stocks, have rebounded strongly in recent sessions as the government’s electricity and fuel price hikes have breathed new life into the sector, even though many companies are still operating in the red.
Shares of LED chipmaker Epistar Corp (晶元光電) rose 12.8 percent to NT$80.20 last week, and those of LED lighting supplier Everlight Electronics Co (億光電子) ended 13.13 percent higher for the week at NT$65.50. Delta Electronics Inc (台達電), a major Taiwanese energy-saving solutions provider, saw its share price increase 5.2 percent to NT$89 in the week, while Tong Hsing Electronic Industries Ltd (同欣電子), the nation’s largest producer of ceramic substrates for LED devices, was up 8.78 percent at NT$111.5. Meanwhile, shares of solar wafer maker Sino-American Silicon Products Inc (中美晶) were up 15.15 percent last week at NT$57 and Motech Industries Inc (茂迪) stock rose 3.44 percent to close at NT$49.65.