Taiwan stocks could face headwinds this week as renewed worries over fresh cases of the deadly Sars virus in China threaten to offset optimism of strong quarterly earnings by companies, analysts said.
"Sars is a concern and many investors will take a wait-and-see attitude for the time being," said Kevin Lin, who helps manage a US $580 million fund at Shinkong Investment Trust.
Taiwan's main TAIEX share index fell one percent last week to 6,748.10 points, snapping three weeks of advances. The index is still up 10 percent over the past month partly on recent gains on Wall Street.
Reflecting concerns over the return of the virus, turnover shrank to T$127.8 billion (US $3.86 billion) on Friday from a one-month high of T$201.8 billion a day earlier.
China confirmed on Friday its first suspected case of Severe Acute Respiratory Syndrome in Beijing since a deadly outbreak last year, putting more than 170 people under observation after finding a nurse with symptoms of the flu-like disease.
Taiwan's health ministry has activated its level A Sars preventive measures, which require travellers from Sars-infected areas to take their own temperatures daily.
Still, the market could find support from company results.
"I'm not too pessimistic about the market because local companies will report good quarterly results this week," Lin said, forecasting a 6,650-7,050 range for the TAIEX this week.
Shares in TSMC and UMC, the world's two largest contract chipmakers, are expected to gather momentum in anticipation of strong first-quarter profits this week.
Analysts said Taiwan Semiconductor Manufacturing (TSMC) and United Microelectronics Corp (UMC) would benefit from surging demand for gadgets.
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