The TAIEX is likely to climb higher ahead of the Lunar New Year holiday next month on the back of an improving global economy and regulatory easing at home, analysts said.
The index advanced 1.5 percent last week to close at 8,535.04 on Friday, the highest close since Aug. 2, 2011, when the index reached 8,545.72 points.
Average daily turnover was modest at NT$74.99 billion (US$2.49 billion) last week, as many foreign players sat out the Christmas holiday.
“The local bourse has mostly priced in the US move to taper off its quantitative easing [QE] and focused instead on better economic data in developed nations,” said Doris Lee (李穗佳), a fund manager at Taishin Securities Investment Trust Co (台新投信), in a note.
The TAIEX may emerge from range-trading and rise to between 8,800 and 8,900 before the market closes on Jan. 28 for the Lunar New Year holiday as foreign institutional investors return from the Christmas holiday break, Lee said.
The market is also expected to gain momentum next month as investors will be allowed to conduct day trading in a wider range of stocks.
Starting on Jan. 6, investors can buy and sell 200 stocks targeted by major-exchange traded funds on the same day.
Bevan Yeh (葉獻文), a fund manager with Prudential Financial Securities Investment Trust Enterprise Co (保德信投信), agreed that the TAIEX is to rise further as some institutional investors are due to build up their positions, barring no more bad news.
However, capital outflows pose concerns in the wake of the US’ planned QE tapering, Yeh said.
The US central bank’s three rounds of QE programs have pushed up bond yields and lent support to equity holdings as investors look for higher returns, but investors across the world will need to adjust their portfolios next year pending major economic bellwethers and corporate earnings figures, Allianz Global Investors Taiwan (德盛安聯投信) fund manager Corrina Xiao (蕭惠中) said.
Among local stocks, analysts are positive about LED companies as the sector is poised for a comeback amid growing demand for energy-saving lighting devices. Local companies involved in making Apple Inc’s iPhone may also benefit after China Mobile Ltd (中國移動) last week inked a deal to sell the handsets in the world’s most populous country, they said.