Shares finished lower yesterday, led by flat-panel stocks, in a slight pullback from the bourse's 10-month closing high in the previous session.
The TAIEX ended down 34.44 points, or 0.6 percent, at 6225.25. Decliners outnumbered advancers 681 to 218 with 96 stocks unchanged.
"The overall decline in flat-panel stocks weighed on the main bourse," said Stanley Chou, an analyst at Barits International Securities (倍利證券).
Chou said investors sold the stocks after Toppoly Optoelectronics Corp (統寶光電) chairman Ray Chen (陳瑞聰) said the chances of LCD panel prices rising may be slim as more production capacity is set to come on line from the second quarter.
AU Optronics Corp (友達光電), a major flat-panel maker, fell 2.9 percent to NT$18.30 and Chi Mei Optoelectronics Corp (奇美電子) dropped 3.9 percent to NT$47.10.
"There were signs institutional investors started repositioning their investment portfolios in a few tech issues in preparation for the next uptrend," Chou said.
Shares in Advanced Semiconductor Engineering Inc (日月光) rose 0.8 percent to NT$24.70 after investment bank Goldman Sachs raised its rating on the chipmaker to "outperform" from "in line."
Analysts said they expect foreign investors will likely continue their recent net buying in the near term, as cross-strait relations appear to be improving.
The scheduled increase in local stocks' weighting in Morgan Stanley Capital International indexes in May is also behind the demand, they said.
Dealers said that foreign investors bought a net NT$8.41 billion (US$270 million) in local shares yesterday.
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