Taipei shares outlook: Mixed to lower ahead of FOMC

TAIPEI (AFX-ASIA) - Share prices are expected to open mixed to lower as investors stay on the sidelines ahead of the FOMC meeting, dealers said.

	    Given a note of caution resulting from Saturday's fire in Hsichih that destroyed offices of the Acer, Tuntex and Wei-Chuan groups, investors are 

likely to take their lead from a report on TSMC and UMC being under pressure to cut wafer foundry prices, they said.

	    Winbond Electronics Corp may attract attention on going ex-stock dividend today, especially after solid net purchases by foreign investors yesterday, 

they added. 

	    Yesterday, the weighted index closed down 56.27 points at 5,176.45 on turnover of 37.55 bln twd.

	    Foreign institutions were net buyers of shares worth 1.79 bln twd, local investment trusts net buyers of 910.93 mln twd while brokers net sellers of 

159.85 mln twd.

	    "The atmosphere does not feel right as the market really has few positive leads to act on or even hope for in the near term," National Securities head of institutional sales Oliver Fang said.

	    "I wonder if a U.S. rate cut of 50 basis points will be taken as a priced-in lead ... and then, a disappointing decision by the Fed will be certainly a catastrophe."

	    Select financials have outperformed lately mainly on expectations of a drastic easing in monetary policy by the central bank, notably a reduction in 

deposit reserve requirements, he said. 

	    "A considerable correction would be simply inevitable if people realise it may not materialse after all. A further symbolic reduction in the discount 

and accommodations rates is also set to be shrugged off as not stimulating enough." 

	    At the same time, MSCI's prospective index revisions should be regarded as a priced-in lead to a large extent as well, he said. 

	    "Foreign investors have been relatively active buyers in recent sessions precisely because of expectations of the MSCI action that will given Taiwan 

shares a higher weighting."

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