The local bourse may remain sluggish this quarter weighed by worries over bird flu and tensions on the Korean Peninsula, foreign institutional investors said yesterday.
The TAIEX edged down 0.7 percent yesterday to close at 7,763.53 points on a light turnover of NT$65.14 billion (US$2.18 billion), as investors stayed on the sidelines ahead of the earnings season, Schroder Investment Management Taiwan said.
“It is too early to judge how the two dramas may unfold, but the equities markets tend to anticipate the worst-case scenario,” Schroder Taiwan vice president Tony Chen (陳同力) said.
That accounted for the local bourse’s recent correction after rising above the crucial 8,000-point mark last quarter, Chen said.
Schroder expects corporate profitability among local companies to flatten at best this quarter, compared with last quarter when exporters likely had benefitted from the local currency’s weakening against its US counterpart.
With Apple Inc unlikely to launch new-generation products in the first half, the local supply chain may not see upside surprises, Chen said.
“That explains why the official Purchasing Managers’ Index climbed to 62.4 percent in March, but fewer firms were optimistic about their business outlook,” the analyst said.
Jordan Chen (陳朝燈), chief investment officer at Schroder Taiwan, said a weaker yen may not be all good news for the local economy, though the nation depends heavily on Japanese imports.
A cheaper yen is unfavorable for Taiwan’s printed circuit board suppliers and IC designers, Jordan Chen said.
JPMorgan Asset Management Taiwan said the TAIEX may trade in a tight range in the foreseeable future, after falling 1.5 percent last week with foreign institutional investors removing a net US$500 million.
The lackluster performance may stay for a while unless major technology firms at home and abroad give stronger-than-expected guidances later this month, JPMorgan Taiwan said.