Taiwan shares end down on futures-led selling

Taipei, Aug. 21 (CNA) Shares in Taiwan moved lower by almost 200 points amid a futures-led sell-off Wednesday, the August futures settlement day, as foreign institutional investors continued to hold more short position contracts than long position ones, dealers said.

The bellwether electronics sector came under heavy downward pressure throughout the session as investors took as their cue losses suffered by tech stocks on U.S. markets overnight, dealers added.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended down 191.21 points, or 0.85 percent, at 22,237.89 after moving between 22,165.82 and 22,358.88. Turnover totaled NT$337.39 billion (US$10.56 billion).

The market opened down 0.50 percent and selling escalated with large cap electronic stocks in focus in the wake of a 0.33 percent decline on the tech-heavy Nasdaq index and a 1.33 percent fall on the Philadelphia Semiconductor Index on Tuesday, dealers said.

The weakness continued until the end of the session, plunging the Taiex below the 22,300 point mark, as the main board faced stiff technical resistance at around 22,459 points, the 60-day moving average, dealers added.

"Yesterday, foreign institutional investors raised their short position futures contracts for hedging purposes amid caution over the movement of the spot market," Mega International Investment Services Corp. analyst Alex Huang said.

As of Tuesday, foreign institutional investors owned 35,638 more short position futures contracts than long position ones, up 938 from a day earlier.

"Today, they just dumped stocks on the spot market in a bid to profit in futures on settlement day," Huang said. "I am not surprised that they stood on the sell side."

According to the TWSE, foreign institutional investors sold a net NT$6.03 billion worth of shares on the main board Wednesday.

"I think foreign institutional investors simply trimmed their holdings in electronic heavyweights after heavy losses among tech stocks on the U.S. markets," Huang said.

"After a recent strong rebound, valuations of tech stocks in Taiwan and in the United States had remained high, paving the way for a pullback like today," Huang said. "That's why the Taiex repeatedly failed to jump over technical hurdles ahead of the 60-day moving average, which prompted many investors to lose patience."

With its American depositary receipts down 1.94 percent overnight, contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock on the local market, fell 1.54 percent to close at NT$958.00. TSMC's fall contributed about 120 points to the Taiex's decline and sent the electronics index and the semiconductor sub-index lower by 1.21 percent and 1.52 percent, respectively.

Among other semiconductor stocks, smartphone IC designer MediaTek Inc. lost 2.40 percent to end at NT$1,220.00, and IC packaging and testing services provider ASE Technology Holding Co. dropped 1.61 percent to close at NT$152.50, while United Microelectronics Corp., a smaller contract chipmaker, ended unchanged at NT$56.00.

Also in the electronics sector, iPhone assembler Hon Hai Precision Industry Co., second to TSMC in terms of market value, lost 1.61 percent to close at NT$183.50, while Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc. bucked the down turn, rising 0.17 percent to end at 2,985.00.

In addition, flat panel AUO Corp. lost 1.52 percent to close at NT$16.10 on falling TV screen prices, and Yageo Corp., the world's third largest multi-layer ceramic capacitor (MLCC) maker, also shed 1.70 percent to end at NT$635.00.

"While the tech sector headed south, investors sought bargains among old economy stocks," Huang said. "I think their gains were largely technical in nature."

Among gaining old economy stocks, shares in food brand Uni-President Enterprises Corp. rose 1.36 percent to close at NT$81.79, and Oceanic Beverages Co. added 1.22 percent to end at NT$12.45.

Meanwhile, Formosa Plastics Corp. gained 0.58 percent to close at NT$52.00, and Nan Ya Plastics Corp. ended up 0.33 percent at NT$46.00, while textile maker Far Eastern New Century Corp. fell 0.81 percent to end at NT$36.80.

In the financial sector, which lost 0.11 percent, Shin Kong Financial Holding Co. soared 5.51 percent to close at NT$12.45 after CTBC Financial Holding Co. announced Tuesday plans to submit a acquisition offer. However, CTBC Financial, ended down 3.71 percent at NT$33.70.

"Further volatility is possible on the local main board as U.S. markets showed no immediate signs of stabilizing," Huang said. "The next solid technical support for the Taiex could be seen at around 21,836 points, the 20-day moving average."