Mon, Jan 27, 2014 - Page 14 News List

TAIEX to be watched for Wall Street ripple effect ahead of Lunar New Year

POSITIVE TERRITORY:The TAIEX’s record of going up on the last trading session before the new year is to be tested after the Dow Jones average fell on Friday

Staff writer, with CNA

Investors are expected to watch the TAIEX closely today to examine whether it can withstand a possible ripple effect from Wall Street to maintain its record of ending in positive territory in the last session before the Lunar New Year.

The Dow Jones industrial average on Friday fell 318.24 points, or nearly 2.0 percent, to 15,879, ending the week down 3.5 percent and following a 217-point loss a day earlier.

The tumble on Wall Street due to concerns over the US Federal Reserve’s next move could have an impact on the week’s only trading session in the local stock exchange, Allianz Global Investors Taiwan Technology Fund manager Chen Wei-ren (陳威任) said.

Both domestic and foreign investors showed signs of caution last week, he added.

The TAIEX registered a weekly rise of 0.03 percent at Friday’s close at 8,598.31.

Chen said the events to watch before trading resumes after the holiday on Feb. 5 include a meeting of the Fed’s Federal Open Market Committee on Thursday and China’s latest purchasing managers index on Saturday.

Government policies and continued recovery in the global economy bode well for the local stock market in the long and medium terms, Prudential Financial High Growth Fund manager Beven Yeh (葉獻文) said.

However, he warned that the TAIEX has risen to a relative high, so that the possibility of a correction after its recent peak cannot be ruled out.

If that happens, domestic investors seeking to benefit from a drop in share prices could intervene and provide support to the stock market, Yeh added.

Buying could come from government funds in order to keep the index in the black, as has been the case in recent days, a market observer said.

Often with some help from the government, the TAIEX has usually gone up on the last trading session before the Lunar New Year.

A positive fall is seen as an auspicious sign.

The last time the index fell at the close before a Lunar New Year was on Jan. 22, 1998, when it fell 13.18 points to close at 8,085.47.

The Lunar New Year begins on this year on Friday.

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