Taiwan Outlook 2008-10-26

NEW WEEK, NEW ‘CURE’
The Taiwan market stopped its freefall thanks to a 3.5% trading limit. Not that a trading limit will actually DO anything, but it makes the politicians feel as if they had done something. Finding a way to cure the symtom while making the problem worse. The last two days of the week, 90% of the equiities in Taiwan did not trade.
The one thing that will come out of this is  the investing public in Taiwan will understand what Limit Down really means. Investors are afraid to invest with the possibility they may be locked into a stock for the next few days.

ON TRACK FOR ANOTHER BAD WEEK

The first part of the week will have to clear out last weeks sell orders. The investing public is still battle weary and shell shocked. Later in the week, the buyers may return. Asian currencies continued to fall, led by South Korea’s won and Taiwan’s dollar.

MARKET OUTLOOK

Not the best. With a few limit down days here, we will have selling pressure early in the week. The backlog of forced liquidations must be cleared out before the market can move higher.

The market has been moving down since July/Aug where we were dealing with congestion. I see no reason for that not to continue.