Taiwan stocks fell 0.31 percent on Tuesday as investors pocketed profits from tech shares such as Mediatek before they see signs of stronger demand and ahead of the central bank's policy-setting meeting. While big tech shares weakend, local fund managers were seen buying small-cap growth shares to boost portfolios before books closed for the first quarter.
"Sentiment turned a bit cautious, but if we don't see any surprise from the central bank, the focus will be back to corporate fundamentals again," said John Chiu, a vice president at Fuh Hwa Securities Investment Trust. The main TAIEX index gave up early gains to close down 24.11 points at 7,811.87, while turnover rose to T$120 billion ($3.8 billion) from T$105 billion in the previous session.
Mediatek, Taiwan's top chip designer and the market's most actively traded share by turnover, slid 2.1 percent, pulling the tech sector 0.11 percent lower. The financial sector lost 0.52 percent before the central bank's meeting. Taiwan's central bank is widely expected to leave its key interest rate at a record low on Thursday, but analysts say the market focus will be on whether it announces any fresh measures to cool the island's booming property prices.
"If you ask me about the corporate outlook for this year, I would say it is okay, but we will see stronger demand from the second half," said Kevin Chung, analyst at Jih Sun Investment Consulting. Top contract chipmaker TSMC was one bright spot, rising 1 percent. Among other major winners, small-cap Neo Solar Power rose 2.7 percent and memory chipmaker Winbond gained 1.8 percent. Foreign investors sold T$7.9 billion worth of Taiwan shares on Monday, ending a three-day buying streak, but had bought T$84 billion of local shares this month as of Monday.
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