Taiwan stocks closed at a 20-month high on Wednesday with China Steel leading industrial shares higher after a share buyback, while electronics issues resumed their advance after easing in the previous session.
The TAIEX share index ended with a rise of 44.05 points, or 0.69 percent, at 6,471.89, its strongest finish since April 28 last year. It was only a nearly five-month high in intraday terms, however.
"There is a lot of retail investor liquidity coming back into the market, but people are not too willing to chase stocks that have already risen by a lot," said Roger Lin, manager of proprietary trading at Pacific Securities.
"Traditional industries didn't gain very much in the electronics-led rally, and China Steel's share buyback also shows that the management feels the stock is undervalued," he added.
China Steel, Taiwan's largest steelmaker, gained 3.55 percent to T$24.80 after announcing on Tuesday it would repurchase 200 million of its own shares at between T$16.8 and T$37.9 each.
Overall market turnover was active at T$105.2 billion, expanding from T$95.28 billion on Tuesday.
Microchip packaging and testing firms, which could be allowed to invest in China if the Mainland Affairs Council approves a Ministry of Economic Affairs proposal, were strong gainers on Wednesday.
Advanced Semiconductor Engineering, the world's largest microchip packager, rose 5.66 percent to T$28.00, while competitor King Yuan Electronics jumped 4.75 percent to T$32.00.
The electronics sub-index rose 0.76 percent.
Tech stocks that led last week's advance were weaker, however. Display screen maker AU Optronics fell 1.62 percent to T$45.55. Brokerage shares rose on the back of heavy turnover in the market in recent weeks. Polaris Securities advanced 5.23 percent to T$15.10, while Masterlink Securities rose 2.43 percent. Powerchip Semiconductor Corp closed 1.18 percent lower at T$21.00 after company spokesman Eric Tang said 2006 capital spending would be US $500-600 million, down from US $1 billion this year.
Camera lens maker Genius Electronic Optical Co Ltd fell 2.4 percent to T$487.00 after surging 109.66 percent in its stock market debut on Tuesda.