Taipei shares outlook - Higher as Wall St rebounds on Fed discount rate cut |
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Mon, 20 Aug 2007 02:15
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TAIPEI (XFN-ASIA) - Share prices are expected to open higher following a strong rebound on Wall Street Friday after the US Federal Reserve cut its key discount rate by half a percentage point.The discount rate refers to the rate at which the Fed lends to banks. The central bank's surprise move quelled investors' credit worries, at least for the time being.Dealers said the local bourse stands a good chance of gaining at least some ground in the near term from its recent bottom below 8,000 points even though it is still premature to conclude that the global credit market crisis triggered by US subprime-mortgage problems is nearing an end.On Friday, the weighted index closed down 111.08 points at 8,090.29 on turnover of 178.43 bln twd.Foreign investors were net sellers of shares worth 29.36 bln twd, local investment trusts net buyers of 4.46 bln twd, and brokers net sellers of 1.16 bln twd.'A rebound will be the reward to those who have not been part of last week's panicky selling,' said Alvin Teng, an assistant vice president with SinoPac Securities.'The crisis facing credit markets boils down to a lack of confidence,' he said. 'And that is precisely what the Fed wants to achieve, restoring confidence by making a largely symbolic move.'Despite volatility remaining a feature for some time, Teng said he does not expect the local bourse to breach its recent low below 8,000 points, as there are expectations that the US central bank will cut its federal funds rate next month.(1 usd = 33.10 twd)philip.wang@afxasia.com-xfnpw/xfnrcCOPYRIGHTCopyright AFX News Limited 2007. All rights reserved.The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News.
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