Share prices closed down 1.02 percent yesterday as investors took profit from early gains ahead of the signing of the Economic Cooperation Framework Agreement (ECFA) with China, dealers said.
The TAIEX fell 77.22 points to close at the day’s low of 7,423.57, off a high of 7,584.81. Turnover was NT$84.99 billion (US$2.63 billion).
The market opened 0.72 percent higher amid optimism over the economic outlook after Taiwan and China sign the trade pact. However, selling emerged later in the session, eroding the early gains as investors rushed to pocket recent profits, dealers said.
The food sector encountered the heaviest pressure, falling 2 percent. The financial sector closed down 1.8 percent, while the textile, plastic and chemical sector and the pulp and paper sector both fell 1.2 percent.
Cement shares dropped 1 percent, machinery and electronics stocks lost 0.7 percent and the construction sector shed 0.4 percent.
Foodmaker Uni-President Enterprises (統一企業) fell 1.52 percent to NT$35.55 and its competitor, AGV Products Corp (愛之味), dropped 2 percent to NT$12.25.
“While many investors have faith in the long term economic outlook after the signing of the ECFA with China, it was time for them to adjust their portfolios,” TLG Asset Management (台壽保投信) analyst Arch Shih (施博元) said.
“The reversal of the early gains was no surprise as the positive aspects of the trade pact have mostly been digested,” Shih said.
Taiwan and China signed the ECFA yesterday afternoon, after both sides finalized their lists of industries that would be eligible for tariff waivers and easy market access.
Shih said selling focused on stocks that have close business ties with China, as they have recently risen on high hopes that their bottom lines would be boosted by increasing cross-strait economic exchanges.
Among the financial stocks that scored the highest gains on Monday on hopes of easier market access to China, Hua Nan Financial yesterday fell 3.33 percent to NT$18.85 and Cathay Financial Holding Co (華南金控) dropped 2.2 percent to NT$49.
Shih said select high-tech stocks appeared resilient to the weakness of the broader market.
“It seems that funds are shifting back to the high-tech sector from old economy stocks. This sector may support the broader market in the short term,” he said.
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