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Investors urged to be cautious on share prices in Q4

Investors urged to be cautious on share prices in Q4

Taipei, Oct. 25 (CNA) Investors should hold a cautious attitude toward the movement of the local bourse in the fourth quarter as market sentiment has been hit hard by heavy losses in recent sessions amid volatility in the global markets, market analysts advised Saturday. Even if the local bourse stages a technical rebound, the room for the gains could be limited as the local equity market has turned technically fragile at a time when the market has feared that foreign investors will move more funds out of the region to chase U.S. dollar assets, they said. On Friday, the weighted index on the Taiwan Stock Exchange (TWSE) fell 0.97 percent to 8,646.01 after a new Ebola case was reported in the U.S., which raised concerns over the spread of the deadly disease and the possible impact on the global economy. With many investors waiting on the sidelines, turnover on the main board Thursday dipped to NT$62.50 billion (US$2.06 billion), the lowest level so far this year, according to the TWSE. In September, the local bourse fell almost 5 percent as foreign institutional investors cut their holdings in local shares, particularly in the bellwether electronics sector. Since the beginning of October, the benchmark index has lost an additional 3.58 percent. Liao Pin-kun, a manager of the Prudential Financial Balanced Fund, said that the future movement of the local bourse will largely depend on what foreign institutional investors will do about their local share holdings. Only if they return to the trading floor and buy into the local equity market will market confidence be strengthened to some extent, Liao said. He said that while the local bourse is expected to remain in the doldrums, investors are recommend to pay close attention to certain stocks in the semiconductor sector which have been hard hit recently. The fund manager said that as Taiwan Semiconductor Manufacturing Co. (TSMC), the world's largest contract chip maker, gave positive guidance for the fourth quarter, shares of wafer foundry operators and integrated circuit packaging and testing services providers have a better chance to move up. Last week, TSMC said that it is likely to post a 4-5 percent sequential increase in consolidated sales for the fourth quarter, defying conventional wisdom that the global IC business will feel the pinch of impact resulting from slow season effects in the quarter. In addition, Liao said that transportation and some other old economy companies such as tire suppliers could see their bottom lines improving due to falling fuel and raw material prices. (By Tine Yu-pin and Frances Huang)


Updated : 2021-10-28 13:37 GMT+08:00