Taiwan stocks edged higher to set a 40-month closing high for a second straight session on Tuesday as investors steered away from high-priced tech and banking stocks and pursued industrial shares.
The TAIEX shares index ended up 0.39 percent at 6,488.34, the highest since late 2000.
Makers of raw materials like glass, paper, cement and petrochemicals showed the strongest gains, as investors quickly backed off from the technology and banking shares that helped the index break technical resistance and jump 1.73 percent on Monday.
"Investors are unwilling to chase highs," said Alvin Teng, assistant research manager at SinoPac Securities. "It looks like people have taken profits and put them into raw materials shares instead of electronics."
"Sentiment is strong, but you cannot underestimate the potential selling pressure at 6,484," Teng said, pointing to a technical barrier from the index's 2002 yearly high.
China Petrochemical was among the day's most active issues, surging 5.03 percent to T$8.35 after 130 million shares changed hands.
Taiwan Cement also gained 4.79 percent to end at T$19.70.
Overall market turnover was strong at T$165.1 billion, remaining steady after setting a seven-month high of T$167.8 billion in the previous session.
China-related issues were also big winners. Uni-President Enterprises, which operates large food processing plants in China, rose 4.68 percent to close at T$17.90.
President Chen Shui-bian, hoping to court businessmen ahead of a tough election in March, unveiled modest measures in late January to expand shipping and air cargo links with rival China. Opposition candidate Lien Chan also vowed to improve ties with China once he takes office.
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