Taiwan shares fall due to ASML report, futures-led selling

Taipei, Oct. 16 (CNA) Shares in Taiwan took a beating on Wednesday, tumbling more than 280 points as selling was sparked by a disappointing sales outlook from Netherlands-based semiconductor equipment supplier ASML Holding NV.

Futures-led selling also pushed down the local main board on Wednesday, when the October futures contracts were settled. Foreign institutional investors who held a large number of short position contracts dumped stocks on the spot market to profit in futures.

The Taiex, the weighted index of the Taiwan Stock Exchange (TWSE), ended down 281.06 points, or 1.21 percent, at 23,010.98, after moving between 22,866.73 and 23,258.52. Turnover totaled NT$410.565 billion (US$12.76 billion).

On Tuesday, the main board ended up 316.75 points, or 1.38 percent, at 23,292.04 amid optimism toward a boom in AI development. But the mood completely changed on Wednesday as U.S.-listed tech stocks came under pressure overnight, pushing down the Philadelphia Semiconductor Index by 5.28 percent.

In Wednesday's early morning session, the Taiex fell more than 400 points at one point with large tech chip stocks, in particular chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), losing value before bargain hunters turned active to narrow the downturn on the main board to about 33.5 points later in the morning session.

However, selling reemerged in the afternoon session as foreign institutional investors apparently intended to drag down the spot market by trimming large cap stocks toward the settlement of October futures, sending the Taiex into a tailspin again.

Chip-related stocks

"ASML's sales outlook hurt investor sentiment about the semiconductor sector," Moore Securities Investment Consulting analyst Adam Lin said. "Taking cues from a 4.59 percent decline of American AI chip designer Nvidia and a 5.22 percent fall of rival AMD overnight, investors here simply dumped TSMC in the early morning session amid concerns over AI futures."

In an accidentally-released earnings report, ASML said it expected net sales of between 30 billion euros (US$32.7 billion) and 35 billion euros, which is in the lower half of a range it had previously provided. ASML shares plunged 16.26 percent following the report.

"However, local tech stocks recovered a lot in the late morning session as investors became calm before futures settlement triggered another round of selling which continued into the end of the session," Lin said.

TSMC, the most heavily weighted stock in the local market, fell 2.34 percent to close at NT$1,045.00 after bouncing back from a low of NT$1,035.00. TSMC's losses contributed about 200 points to the Taiex's decline and sent the electronics index and the semiconductor sub-index lower by 1.57 percent and 2.09 percent, respectively.

Lin was not as downbeat about AI futures as those investors, saying that TSMC is not the cause of the Dutch firm's weaker-than-expected sales outlook and companies like Intel are expected to scale down their purchases to cap ASML's sales.

Among other semiconductor stocks, IC packaging and testing services provider ASE Technology Holding Co. shed 2.08 percent to close at NT$165.00, smartphone IC designer MediaTek Inc. lost 1.92 percent to end at NT$1,275.00 and chipmaker United Microelectronics Corp. (UMC) dropped 1.71 percent to close at NT$51.70.

Bucking the downturn, Novatek Microelectronics Corp., UMC's display IC design subsidiary, rose 1.56 percent to end at NT$521.00.

AI-related stocks also saw their losses capped with iPhone assembler Hon Hai Precision Co., which also rolls out AI servers, down 0.97 percent to close at NT$205.00 and AI server supplier Quanta Computer Inc. down only 0.17 percent at NT$295.00.

Old economy sector

"When the electronics sector moved in the doldrums, investors looked for targets in the old economy sector to park their money," Lin said. "Today, the transportation industry benefited from such rotational buying."

As a market laggard, the transportation industry rose 1.22 percent with Evergreen Marine Corp., the largest container cargo shipper in Taiwan, up 1.07 percent to close at NT$189.50, and rivals Yang Ming Marine Transport Corp. and Wan Hai Lines Ltd. up 0.95 percent and 1.36 percent, respectively, to end at NT$63.70 and NT$82.20.

In addition, EVA Airways gained 2.07 percent to close at NT$37.05 and China Airlines rose 1.91 percent to end at NT$21.30.

Elsewhere in the old economy sector, Formosa Plastics Corp. lost 0.83 percent to close at NT$47.95 and Nan Ya Plastics Corp. fell 0.94 percent to end at NT$42.25.

Lin said the financial sector fell victim to futures-led selling due to its relatively large weighting on the main board.

The financial sector fell 1.03 percent, with Fubon Financial Holding Co. shedding 1.74 percent to close at NT$90.30, and Cathay Financial Holding Co. losing 1.45 percent to end at NT$67.80.

According to the TWSE, foreign institutional investors sold a net NT$34.12 billion worth of shares on the main board Wednesday.