Foreign institutional investors record highest daily net sell

Taipei, Aug. 3 (CNA) Foreign institutional investors registered the highest ever daily net sell on the local main board on Friday, pushing down the benchmark index by more than 1,000 points, the steepest daily closing plunge in history, according to the Taiwan Stock Exchange (TWSE).

On Friday, when local market sentiment was spooked by heavy losses on the U.S. markets a session earlier, the Taiex, the weighted index on the TWSE, tumbled 1,004.01 points, or 4.43 percent, to close at 21,638.09 in the wake of a foreign institutional investors' net sell of NT$94.43 billion (US$2.88 billion). Taiex fell below the nearest technical support ahead of the 60-day moving average 22,358 points.

The net sell by foreign institutional investors beat the previous record high of NT$94.42 billion seen on Feb. 26, 2021, the TWSE's data showed.

The Taiex's plunge followed a 1.21 percent fall on the Dow Jones Industrial Average, a 2.30 percent decline on the tech-heavy Nasdaq index and a 7.14 percent dive on the Philadelphia Semiconductor Index on Thursday.

The selling was sparked by growing worries over the U.S. economy, the world's largest, at home and abroad as Washington reported contraction of July manufacturing activity for the fourth straight month and the Institute for Supply Management's Purchasing Managers' Index falling to an eight-month low.

Tech heavyweights in Taiwan came under grave downward pressure throughout the trading session to lead the broader market to trend sharply lower with the electronics index and the semiconductor sub-index down 5.48 percent and 5.90 percent, respectively.

Large cap tech stocks were the target of foreign institutional selling as contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock in the local market, suffered a net sell of 43.20 million shares and saw its share price diving 5.94 percent to close at NT$903.00. Its market capitalization was wiped out by NT$1.47 trillion in one single session to NT$23.41 trillion.

TSMC's losses contributed about 463 points to the Taiex's plunge on Friday.

In addition, iPhone assembler Hon Hai Precision Industry Co., second to TSMC in terms of market value, saw an even larger net sell of 71.40 million shares by foreign institutional investors, with its share price falling 7.9 percent to end at NT$186.50 and its market capitalization falling by NT$221.8 billion to NT$2.58 trillion.

In addition to the massive net sell on the spot market, foreign institutional investors also recorded a net of 45,100 short position contracts on the futures market as of Friday, the highest net level, as a way to hedge possible risks on the spot market.

After Friday's heavy losses, the Taiex saw its earlier gains wiped off and dipped to negative territory, by falling 481.12 points, or 2.18 percent, this week, marking the third consecutive week of a decline.

The market capitalization of the local main board was cut by NT$1.52 trillion in one week to NT$69.04 trillion.

During the week, the transportation index bucked the downturn, rising 2.18 percent, the largest growth among the major industries on the main board, while the electric machinery index suffered the steepest fall of 7.88 percent.

The semiconductor industry recorded NT$628.65 billion in turnover this week, accounting for 31.67 percent of the total, ahead of the computer and peripheral industry (NT$251.54 billion, 12.67 percent) and the electronics component industry (NT$227.04 billion, 11.44 percent).

Overnight, the Dow incurred more losses, falling 1.51 percent with the Nasdaq index also extending weakness, dropping 2.43 precent as the United States reported a much weaker-than-anticipated jobs report for July, which raised worries that the economy could be falling into a recession.

Market analysts said volatility on the U.S. markets is expected to bring in more selling pressure on Taiwan's market soon before the opening on Monday.

The Financial Supervisory Commission (FSC), the top financial regulator in Taiwan, said Friday's losses on the Taiex largely reflected the weakness of the global markets, citing a 5.31 percent drop in Japan, a 3.6 percent fall in South Korea and a 2.37 percent decline in Hong Kong.

The FSC said fundamentals in Taiwan remained sound, adding that the combined sales on the local main board and the over-the-counter market rose 10.23 percent to hit NT$20.03 trillion in the first half of this year.