Taiwan stocks gave up early gains to close lower on Monday, edging further away from a 41-month high reached last week, as cautious investors sold tech issues like TSMC before the March 20 presidential election.
The main TAIEX jumped more than one percent in early trade before late profit-taking pulled it down 0.61 percent to end at 6,901.48. But as of Monday, the index was still up some 17 percent since the beginning of the year.
Turnover shrank to T$153.0 billion from Friday's T$253.7 billion, the highest level in nearly four years.
"With only two weeks to go to the election, such a cautious mood is understandable," said More Huang, who manages T$1 billion at UBS Asset Management.
"But recent heavy foreign fund buying...helped cushion the fall," Huang said. Taiwan Semiconductor Manufacturing Co (TSMC), the world's top foundry and the market's most heavily weighted stock, slid 1.49 percent to T$66.00, pulling the tech sub-index 0.5 percent lower. The financial sector was off 1.34 percent.
Nanya Tech, the island's top memory chipmaker, slipped 1.17 percent to T$25.40 after chip giant Intel lowered the midpoint of its quarterly sales forecast last week.
Taiwan's President Chen Shui-bian - whom China accuses of pushing the island dangerously closer to independence - is in a close race with opposition Nationalist candidate Lien Chan.
But display screen issues defied the weakness.
AU Optronics, the world's number-three display maker, gained 0.85 percent to T$59.50 and smaller rival Quanta Display was up 2.07 percent at T$24.60.
Both stocks have more than doubled since early May last year, driven by expectations that higher screen prices would help boost their profits.
Foreign investors bought a net T$16.03 billion (US $480 million) in Taiwan stocks on Friday, and have accumulated a net T$76.4 billion of shares over the previous eight sessions.
The over-the-counter TAISDAQ index rose 0.6 percent to 149.60, while March TAIEX index futures shed 1.4 percent to 6,976.
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