Corporate earnings and business outlook at listed firms would dictate the local equity market’s direction this week, while investors would especially be waiting for the Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) investors’ conference scheduled for Thursday, equity strategists said.
Despite concerns over a resurgence of COVID-19 in China and its effects on the global economy, market movements this week might follow the activities of foreign institutional investors, who bought a net NT$6.61 billion (US$215.3 million) of shares on the main board in this year’s first trading week, strategists said.
Foreign investors last year sold a net NT$1.23 trillion of shares, the highest amount on record.
Photo: CNA
Flat-panel maker Innolux Corp (群創), Powerchip Semiconductor Manufacturing Corp (力積電) and Shin Kong Financial Holding Co (新光金控) were the top three stocks bought by foreign institutional investors last week, with financial stocks making up five of the top 10, Taiwan Stock Exchange data showed.
The TAIEX on Friday closed up 0.51 percent at 14,373.34 points for a weekly increase of 1.67 percent as local and foreign institutional investors bought shares, exchange data showed.
Domestic proprietary traders last week added a net NT$3.17 billion of local shares and investment trust firms added a net NT$2.62 billion, exchange data showed.
Electronics shares were last week’s best performers with a 2.22 percent gain, followed by financial shares, which rose 1.63 percent, PGIM Securities Investment Trust Enterprise Co (PGIM, 保德信投信) analyst Sun Chuan-shu (孫傳恕) said in an investment note on Friday.
Electronics stocks often perform well in January, Sun said, citing historical patterns.
However, as the Lunar New Year holiday this year is earlier than usual, fund managers are focusing on short-term trading, he said, adding that the chances of seeing big moves in the market are low.
Taiwanese stocks are expected to face headwinds in the first half of this year, Sun said, citing a slowdown in the manufacturing purchasing managers’ index (PMI), a downward revision in profit forecasts for technology stocks and recession concerns in major economies.
While the TAIEX has stayed above 14,000 points in recent sessions, it would need more vigor to stage a substantial rebound, which is unlikely ahead of the Lunar New Year holiday, while selling in small and mid-cap stocks might occur ahead of the week-long holiday, SinoPac Securities Investment Service Corp (永豐投顧) said in a separate note.
It is normal for investors to trim their exposure ahead of long holidays, SinoPac said.
Tuesday next week is the last trading day before the holiday.
Equity markets in Taiwan are to reopen on Jan. 30.
If TSMC and smartphone camera lens maker Largan Precision Co (大立光) reveal positive business guidance at their investors’ conferences on Thursday, it could support their stock prices and serve as a catalyst for local shares to move up in the short term, SinoPac said.
Investors might also take their cue from financial results released by other local companies this week. Networking chip supplier Realtek Semiconductor Corp (瑞昱半導體), DRAM chipmaker Nanya Technology Corp (南亞科技) and Formosa Plastics Group’s (台塑集團) four major subsidiaries are among the companies that are to report their earnings this week.
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