The TAIEX yesterday touched the much-anticipated 10,000-point mark midsession, but closed down 0.22 percent at 9,915.48 points on a large turnover as investors cashed out on gains, traders said.
“Concerns over downward revisions drove investors to take profits after the main index briefly touched the psychologically important barrier,” JP Morgan Asset Management (摩根投信) fund manager James Yeh (葉鴻儒) said.
The reversal did not indicate changes in market fundamentals, but reflected a lack of confidence on the part of investors, Yeh said.
Turnover jumped 30.57 percent from Monday to NT$108.2 billion (US$3.58 billion), as foreign institutional investors increased holdings of local shares by a net NT$5.17 billion, Taiwan Stock Exchange (TWSE) data showed.
Foreign funds are upbeat about the outlook for Taiwanese shares this year, especially for firms in Apple Inc’s supply chain, with overbought positions totaling NT$232.6 billion as of Monday.
Mutual funds and proprietary dealers trimmed positions by NT$1.75 billion and NT$1.06 billion respectively yesterday, accounting for the benchmark’s downturn, the TWSE figures showed.
It might take some time before the TAIEX secures a solid foundation above the 10,000-point mark as it did in 2015, because investors need more time to grow used to the idea, Yeh said.
Price-to-equity levels remain at 14, a healthy level on par with the 15-year average, while dividend yields might hover at about 4 percent, lending to the attractiveness of local shares, Yeh said.
Local shares might continue to benefit from expectations of inventory-building linked to a new Apple iPhone series likely to be launched in September, Yeh said.
Shares in Hon Hai Precision Industry Co (鴻海精密), a key assembler of Apple’s products, gained 2.97 percent to NT$104, while shares in Largan Precision Co (大立光), a camera lens supplier to Apple, picked up 1.22 percent to NT$4,995, TSWE data showed.
However, reports over a possible launch delay might hurt Apple-related shares if they turn out to be true, Yeh said.
This year’s rally on the local bourse has a broad base, thanks to an improving economy at home and abroad that has facilitated the return of active traders from overseas markets, Allianz Global Investors Taiwan said.
Investors should not assign too much importance to the level of the index, but instead base their investment decisions on the financial performances of individual companies, Allianz Global said.
First Securities Investment Trust Co (第一金投信) recommended caution, citing global downside risks.
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