Taiwan Shares End Lower On Swine Flu Concerns, Profit-Taking

-Concerns that the spread of swine flu would hit travel demand and weigh on the Taiwan economy sent local shares to their lowest close in two weeks Monday.

Investors also took profit on local stocks following the signing of financial cooperation agreements between Taiwan and China over the weekend.

The Weighted Price Index of the Taiwan Stock Exchange fell 175.72 points, or 3.0%, to 5705.05. It was the lowest close for the index since it ended at 5667.80 on April 9.

Turnover totaled NT$136.80 billion, down from the previous session's NT$144.88 billion. There were 419 gainers, 1,850 decliners, and 64 closed unchanged.

Traders said stocks will likely stay weak Tuesday.

"We already expected stocks to correct this week after the Chiang-Chen meeting and ahead of earnings, and now this unexpected negative (swine flu) came out, so stocks will fall more tomorrow," said Alex Huang, vice president at Mega Securities.

Ta Ching Securities manager Daniel Liu said if the index falls below the 20-day moving average of 5700 Tuesday, "it is certain it will test 5500 support."

P.K. Chiang, chairman of Taiwan's semiofficial Straits Exchange Foundation and Chen Yunlin, head of its Chinese counterpart, the Association for Relations Across the Taiwan Straits, signed agreements Sunday on closer financial cooperation, and more than doubling cross-strait direct flights.

But traders said all the positive catalysts from the meeting have already been priced in.

"There were no positive surprises that came out of the meeting," said a sales trader at ABN Amro, who declined to be named.

Taiwan's financial subindex advanced 41.8% from the close on March 2 through Friday, and the transport index rose 38.8%, compared with a 32.9% gain in the main board index.

Cathay Financial Holding fell 5.6% to NT$34.50 and Chinatrust Financial Holding dropped 6.9% to NT$14.10.

Tourism and airline stocks bore the brunt of the declines Monday on concerns swine flu would hit travel and tourism, but biotechnology and pharmaceutical shares rose. link....