No news is good news for Taiwan’s market

Nick Land, The China Post

The upward trend of Taiwan stocks continued yesterday, with the market climbing 0.72 percent or 33.51 points to close at 4,623.11. Turnover was also higher, rising to NT$64.5 billion from Tuesday’s level of NT$45.7 billion. Broad-based upward momentum lifted the market at the opening, although choppy trade saw it enter negative territory in mid-session. The index easily breached the 4,600 barrier late in the session, but profit-taking pulled it off highs by the close.

Dealers were mixed on their analyses of current incentives, with cross-strait liberalization prospects, foreign equity-capital inflows, and speculative trades all being touted as leading influences. Despite market sentiment being under-motivated it remains generally bullish, with some dealers even envisaging a test of the 5,000-points threshold in the short-medium term. In a reversal of yesterday’s trends, Taiwan’s foundry blue-chips ended flat, unaffected by gains in their U.S.-listings. High-tech stocks making gains on the back of the market’s broadening out of recent gains were mostly small/medium-cap or laggard stocks. Financial titles were also mostly weak on concerns that Monday’s bounce was out of line with the fundamentals of the sector. The “Big 3” commercial banks ended mixed. Transport stocks performed well again, pointing to a firming of market expectations on cross-strait liberalization progress.

Dealers were encouraged by the fact that an absence of negative news seems sufficient to keep the market moving upwards at the moment, although the current lack of clear incentives could lead to excessive jumpiness on external data and also encourage speculative volatility.