Local stocks are expected to stage a range-bound consolidation this week as the market weighs the results of major corporate earnings to be released in the week, while some investors remain skeptical ahead of the special municipality elections next month, market strategists said.
More than 30 high-tech companies in the fields of flat-panel making, chip designing, chip testing and notebook manufacturing are scheduled to hold quarterly investors conferences this week to release their third-quarter financial results and provide guidance on the fourth quarter.
In the flat-panel sector, the touch-panel maker Young Fast Optoelectronics Co (洋華光電) will lead the conference-week tomorrow, followed by those of e-paper display maker E Ink Holdings Inc (元太科技) and LCD panel maker AU Optronics Corp (友達光電) on Wednesday.
Siliconware Precision Industries Co Ltd (矽品精密), the world’s No. 2 chip packager, will face investors on Tuesday, while Advanced Semiconductor Engineering Inc (日月光半導體), the No. 1, will take stage on Friday.
Chen Yen (諶言), a fund manager at Franklin Templeton SinoAm Securities Investment Management Inc (富蘭克林華美投信), said the stock market would maintain the current correction mode as investors -speculate on possible election results and wonder about the fluctuating exchange rate impacts on corporate earnings.
Elections for the heads of five special municipalities will take place on Nov. 27.
“The market’s range-bound trading is likely to continue in the short term until the daily turnover is sufficiently large to pull the market out of its current doldrums,” Chen said in a statement on Friday.
The TAIEX ended 0.45 percent lower last week at 8,168.06 points from the previous week, following a 0.47-percent decline in the previous week, the Taiwan Stock Exchange’s data showed.
The local bourse saw an average daily turnover of about NT$113.18 billion (US$3.66 billion) last week, slightly lower than the NT$113.32 billion it saw in the previous week, the exchange’s data showed.
Chang Shu-hui (張淑蕙), a fund manager at Prudential Financial Securities Investment Trust Enterprise Co (保德信投信), said the size of daily turnover had been limited at around NT$100 billion in recent sessions, which is one of the reasons why the main bourse failed to surpass the 8,250 point level, she said.
“There was a clear sign of depressed electronics shares as profit taking emerged whenever prices moved higher. That was because of investors’ cautious attitude toward the third-quarter results and the fourth-quarter outlook,” Chang said in a Friday note posted on the company’s Web site.
“If the market does not fall further following the release of corporate earnings, we can judge this as a sign of the market hitting bottom,” she said.
Other heavyweight companies to release their quarterly results are United Microelectronics Corp (聯電), the world’s second-largest contract chipmaker, on Wednesday ahead of stronger rival Taiwan Semiconductor Manufacturing Co’s (台積電) on Thursday.
Meanwhile, Asustek Computer Inc (華碩), the world’s No. 5 PC brand, Acer Inc (宏碁), the world’s second-largest PC brand, and -smartphone maker HTC Corp (宏達電) are expected to shed light on the latest developments in the PC and handset sectors during their conferences on Thursday and Friday.
While the main bourse is still in the process of consolidation, the market has a 60 percent to 80 percent chance of moving up after the special municipality elections, according to an analysis conducted by the Taishin Securities Investment Trust Co (台新投信).
“Based on past experience since 2000, the market has an 80 percent chance of rising in the six months after the local government elections,” Kuo Chien-cheng (郭建成), a fund manager at Taishin Investment, said in a client note on Friday.
The analysis uses the market performances in the 2001, 2005 and 2009 local government elections as well as 2002 and 2006 Taipei and Kaohsiung mayoral elections.
It showed that the market has an 80 percent chance of rising one week before the local government elections, an 80 percent chance of rising one month after the elections, a 60 percent chance of rising three months after the elections and 80 percent, six months after the elections.
Kuo said he was bullish about the prospects of local bourse during the medium term and maintained a positive view on China-related stocks in his portfolio.
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