Taiwan shares seen quiet ahead of long holiday

Taiwan share prices are expected to move in quiet trade next week ahead of a prolonged Dragon Boat Festival holiday, dealers said.

Fears of possible negative news to emerge from foreign markets during the holiday are expected to drive investors in Taipei to the sidelines and drag down daily turnover, they said.

As the market has scored significant gains recently, institutional investors tend to pocket profits before new buying opportunities appear, the dealers added.

Technical resistance will turn heavy next week as the market moves closer to the key 6,800 level, while bargain hunters are expected to help the market weather pressure at around 6,500, dealers said.

In the week to May 22, the market rose 248.20 points or 3.82 percent to 6,737.29 after a 1.44 percent fall a week earlier.

Average daily turnover stood at 189.36 billion Taiwan dollars (5.80 billion US), compared with 170.52 billion dollars a week ago.

The market will be closed Thursday and Friday for the public holiday.

Cautious sentiment had dominated trade in the past few sessions, Concord Securities analyst Allen Lin said, with profit-taking compromising earlier upside.

"The market has become technically unstable following a recent strong showing. I expect more and more investors will retreat from the trading floor, waiting for new hints," Lin said.

"And the upcoming long holiday will prompt investors to take to the sidelines or even to unload their holdings on fears of possible negative factors to come," he said.

"Without daily turnover expanding to more than 200 billion, it is not easy for the market to overcome the technical barriers ahead."

Lin said the market is also watching closely how foreign institutional investors will act as they have started to cut holdings for profit.

"Trade by foreign investors has served as a market indicator. Their moves will affect market confidence," he said. TAIPEI, AFP