The TAIEX experienced a correction of nearly 3 percent last week, and foreign investors’ fund flows are likely to be key to the market’s performance this week, analysts said.
As the outlook for the international economy remained mixed and mainstream stocks on the Taiwan Stock Exchange (TWSE) seemingly lost steam, the TAIEX shed 21.53 points, or 0.26 percent, to close at 8,146.43 points on Friday.
For the whole of last week, the index dropped 2.76 percent from the previous week.
Selling last week largely came from foreign institutional investors who cashed in to move funds overseas, analysts said.
Based on Taiwan Stock Exchange Corp (TWSE, 台灣證交所) tallies, foreign investors sold a net NT$50.85 billion (US$15.7 billion) worth of shares, compared with a net buy of NT$15.76 billion for all of last month.
Market turnover hit NT$280.61 billion last week and totaled NT$6.75 trillion for the year, with a daily average of NT$84.43 billion, TWSE data showed.
If the TAIEX fails to sustain itself above the 8,100 point mark in upcoming sessions, further losses are likely to follow, analysts said.
“So far this year, the movement of foreign investors has been a major driver of the local stock market. Their recent sell-off has also contributed to market correction of late,” Allianz Global Investors Taiwan’s fund manager Corrina Xiao (蕭惠中) said in a report on Saturday.
Xiao said foreign players’ fund movements would continue to weigh in the TAIEX’s performance this week.
“Looking ahead, major Taiwanese companies’ earnings results for last quarter and their outlook for this quarter are to lead the direction of the foreign fund flows,” Xiao said.
President-elect Tsai Ing-wen’s (蔡英文) upcoming inauguration address and the US Federal Reserve’s interest rate policy are also likely to affect foreign investors’ moves in the near term, she said.
Government regulations require companies listed on the Taiwan Stock Exchange and the Taipei Exchange to release their earnings results for last quarter before Monday next week.
More than 15 companies — including major tech firms Pegatron Corp (和碩), Quanta Computer Inc (廣達), Asustek Computer Inc (華碩) and machine tool leader Hiwin Technologies Corp (上銀) — are scheduled to host investors’ conferences this week to offer their business outlook for this quarter and the second half of this year.
Analysts said investors have taken in the news of Apple Inc’s sluggish iPhone sales in the first quarter, leading sluggish stock price performances of several Apple suppliers in recent sessions.
Hon Hai Precision Industry Co (鴻海精密) and Pegatron shares last week dropped nearly 5 percent from the previous week.
Apple suppliers’ guidance for their business this quarter and beyond is likely to be the key to their stock performance in the near term, analysts said.
“Investors should watch closely whether those companies trim their guidance for this quarter because of the US company’s iPhone sales,” Xiao said.
However, Xiao said the growth momentum of many local firms is relatively soft and the market seems to lack any positive surprises for the near term.
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