Shares yesterday rose to a three-and-a-half month high following gains in US stocks overnight, but the increase was limited by investors taking profits ahead of local elections today.
The TAIEX gained 49.13 points, or 0.8 percent, to 6,228.95, on turnover of NT$112.31 billion (US$3.34 billion).
Risers led decliners 561 to 454, with 189 stocks unchanged. Yesterday's closing level was the highest since Aug. 17, when the index reached 6,241.92.
The index reached 6,258.34 early in trading, but profit-taking emerged on uncertainty ahead of today's polls, said Alex Huang, assistant vice president at the Barits International Securities Investment Services (
"The index gained an unprecedented 600 points in just one month since the last low, so selling pressure is inevitable," Huang said.
The benchmark index fell to a 14-month low of 5,632.97 on Oct. 28.
Gains ahead
The benchmark index is expected to extend gains early next week as investors look past the political uncertainties raised by today's polls, dealers said.
They said profit-taking pressure is likely to emerge later in the week in a consolidation following gains in recent weeks.
Foreign investor support for the key electronics sector should underpin the market and prevent any sharp decline, however, giving a trading range of 6,150-6,300 points next week.
For the week, the TAIEX closed up 100.75 points or 1.64 percent after a 0.35 percent gain the previous week.
Average daily turnover stood at NT$94.62 billion, up from NT$76.47 billion.
China chips
"The market hopes that cross-strait relations will improve after the elections and consequently, so-called `China chips' -- those companies which have business ties with China, such as shipping shares -- have benefited," said Duneuw Huang, an analyst with Capital Securities (
At the same time, profit-taking is likely given that the local index has now put on 7.43 percent since Nov. 1.
However, "continued foreign investor interest in the electronic sector will help stabilize the bourse," Huang said.
Alex Huang said he is not that optimistic.
"More and more foreign fund managers will go on vacation as the Christmas holiday approaches," the assistant vice president of Barits said.
"I do not think the local market will get much help from foreign buying next week," he said, putting downside support at around 6,000 points.
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