The TAIEX is likely to move in a narrow range with low trading volumes this week as investors await quarterly earnings and business outlook reports from the nation’s technology heavyweights, analysts said.
The main index lost 0.38 percent last week to reach 7,408.76 on Friday after fluctuating within a tight range of 52 points with turnover totaling NT$289.83 billion (US$9.9 billion) for the whole week, the lowest this year, Taiwan Stock Exchange data showed.
“The main index may continue to consolidate, while the earnings season pans out,” Allianz Global Investors Taiwan Ltd (德盛安聯投信) fund manager Corrina Xiao (蕭惠中) said in a report.
The US presidential elections and leadership transitions in China next month are deepening unease after expectations of rallies in the wake of US quantitative easing measures fade away, Xiao said, while concerns over the European debt problems linger.
Xiao added that the backdrop warrants caution after a survey last week indicated Taiwan’s investor confidence slumped to its lowest level yet after the global financial crisis of 2008.
The quarterly survey by JPMorgan Asset Management Taiwan (摩根資產管理) found that the sentiment gauge had fallen for the third consecutive quarter to 82.7 this month, down 2.2 points from July, as investors turn gloomier about the economic outlook at home and abroad.
Scores lower than 100 indicate pessimism, while values above the neutral mark suggest optimism, the foreign fund house said.
The weak sentiment drove the TAIEX below the yearly moving average and accounted for sluggish trading, JPMorgan Taiwan vice president Alex Chio (邱亮士) said.
“Investors may adopt a wait–and-see attitude for a while until uncertainty clears,” Chio said in the report.
Taiwan Semiconductor Manufacturing Co (台積電), the world’s largest contract chipmaker and AU Optronics Corp (友達光電), the nation’s No. 2 LCD panel maker, will release earnings figures on Thursday and more firms will follow suit later.
The book-to-bill ratio for North American-based semiconductor equipment manufacturers slipped to a new low last month, suggesting weak demand in coming months.
Kent Liu (劉宇衡), a fund manager at Taishin Securities Investment Trust Co (台新投信), said the TAIEX may trade between 7,300 and 7,400 in the short term as the impacts of earnings results will likely be limited this time around, compared with the impact of first-half figures.
“The markets have priced in earnings surprises last quarter, except for the recent gains in the local currency — that may squeeze firms’ profit margin,” Liu said in a report.
The New Taiwan dollar picked up 1.4 percent since Sept. 13 when the US Federal Reserve announced a new round of quantitative easing to stimulate economic growth.
The local bourse has a fair chance of staging a rebound next month as exporters may report stronger shipments ahead of the Christmas shopping season, Liu said.