Taiwan’s stock market is expected to steam ahead and get out of the current doldrums in the fourth quarter after it spent some time in consolidation mode amid unfavorable external leads, a local fund manager said on Saturday.
The stock market has fluctuated in ranged trade in recent sessions, facing strong technical resistance at between 8,100 and 8,200 points amid concerns over a possible US strike against Syria and a likely exit by the US Federal Reserve from its US$85 billion a month bond-buying program.
Doris Lee (李穗佳), a fund manager with the Taishin 2000 High Technology Equity Fund, said despite recent consolidation, foreign institutional investors served as net buyers of local shares, paving the way for the local exchange to post gains in the fourth quarter with the help of ample liquidity.
On Friday, the weighted index on the Taiwan Stock Exchange closed down 0.05 percent at 8,164.20 points as the bellwether electronics sector took a breather from the gains posted a session earlier.
Foreign institutional investors had bought a net in the local exchange for seven trading sessions in a row, and could continue buying local shares as they expected to move more funds into Taiwan, Lee said.
Since Aug. 29, when foreign institutional investors resumed buying in the local exchange, they have served as net buyers of NT$45.99 billion (US$1.54 billion) worth of local shares, according to statistics compiled by the Taiwan Stock Exchange.
Lee said it seemed that investors had turned more upbeat about the local stock market performance as they had not only picked up bargains in the spot market, but also cut their short positions in futures.
The margin trade posted by retail investors remained at a relatively low level of about NT$180 billion, indicating that the exchange had turned technically healthier and was ready to move higher in the near future, Lee said.
The market is expected to rise higher on rotational buying, Lee said, adding that she expected buying would rotate to so-called “Apple concept stocks,” which are the suppliers to the US consumer electronics giant, as investors have been upbeat over the likely launches later in the month of the new iPhone and iPad.
Lee said she also preferred electric car component stocks on hopes that a plan by the world’s largest electric vehicle supplier, Tesla Motors, to launch new models would boost Taiwanese suppliers’ sales. Biotech stocks could also benefit from the government’s policy to develop the industry, she said.
William Dong (董成康), equities and research head of UBS Securities Taipei branch, said the stock exchange would likely continue consolidation into next month. A rebound might occur in November, when the market’s focus begins shifting from short-term trends to medium-term outlooks for next year, Dong said in a note last week.
Additional reporting by Kevin Chen