Taiwan's main stock index pared early losses to end steady on Tuesday as financial shares fell after recent rallies and LCD makers, such as Innolux, gained on optimism about their earnings outlook. The main TAIEX share index opened down 1.5 percent after a report said the cabinet was considering levying taxes on enterprises' gains from stock investments.
But the index trimmed early losses to finish 3.28 points lower at 7,596.60 after Taiwan dismissed the report. Chinatrust Financial, Taiwan's top credit card issuer, dropped 2.28 percent, after Primus won the bid for AIG's Taiwan insurance unit Nan Shan Life on Tuesday.
The banking and insurance sub-index was among the session's top losers, falling 0.9 percent. The financial sector had risen about 10 percent in the past month, outperforming the broader market's 5 percent gain. "Sentiment picked up after investors looked beyond the report on the government's plan to collect stock income taxes, and even if it was true, the plan wouldn't have taken place in the foreseeable future," said Kevin Chung, an analyst at Jih Sun Investment Consulting Co.
Turnover was moderate at T$129 billion ($4 billion), compared with Monday's T$106 billion. Topping the session's most-active stock by turnover was Innolux Display, the world's No 2 LCD monitor maker. The stock soared 6.91 percent. AU Optronics and Chi Mei Optoelectronics advanced 1.86 percent and 4.22 percent, respectively.
Flat screen makers in South Korea and Taiwan are likely to report a jump in quarterly profit after strong demand and a shortage in raw materials boosted prices, analysts said. "The LCD sector was shadowed by a bearish outlook due to falling panel prices, but sales in LCD companies are actually picking up and therefore prompted short-covering among investors," said Vincent Ho, a fund manager at J.P. Morgan Asset Management.
Technology shares were mixed before quarterly earnings from their US peers, including chip giant Intel Corp TSMC, the world's largest contract chipmaker, was up 0.98 percent, while its smaller rival, UMC, ended flat. Acer, the world's No 3 PC brand, fell 1.71 percent after the company said it expected to report a third-quarter net profit that meets market expectations. Acer said its shipments in the fourth quarter would climb from the preceding three months.