Taiwan shares end lower on futures-led selling ahead of Nvidia results

Taipei, Nov. 20 (CNA) Shares in Taiwan gave up earlier gains to close lower on Wednesday, as selling pressure emerged, particularly during the afternoon session.

Dealers attributed the selling to the settlement day of November futures contracts, which coincided with a relatively high level of short positions held by foreign institutional investors.

Turnover stayed thin as many investors preferred to stay on the sidelines, awaiting the release of quarterly results and guidance for the current quarter by U.S.-based artificial intelligence chip designer Nvidia Corp., dealers said.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended down 160.44 points, or 0.70 percent, at 22,688.36 after moving between 22,622.47 and 22,977.56. Turnover totaled NT$376.88 billion (US$11.61 billion).

The market opened up 0.11 percent and rose to the day's high in the early morning session on follow-up buying from a session earlier, when the Taiex gained 1.34 percent, as investors took cues from a 1.04 percent increase on the tech-heavy Nasdaq index overnight to pick up large-cap electronics stocks, dealers said.

With the index moving closer the nearest technical resistance ahead of 23,000 points, however, some investors shifted to the sell side.

The selling escalated in the late afternoon session to send the broader market to negative territory as investors rushed to trim their positions in contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) among other tech heavyweights on futures settlement, dealers said.

According to Moore Securities Investment Consulting analyst Adam Lin, foreign institutional investors owned about 41,000 November short position futures contracts more than their long position contracts as of Tuesday.

"The net number of short position futures contracts stayed at a relatively high level so it was no surprise that foreign institutional investors dumped stocks on the spot market in a bid to profit in futures," Lin said.

"Selling TSMC was the most effective way to drag down the Taiex on the spot market," he said.

TSMC, the most heavily weighted stock in the local market, lost 1.44 percent to close at NT$1,025.00 after hitting a high of NT$1,050.00.

TSMC's losses represented about 80 points in the Taiex's decline and sent the electronics index and semiconductor subindex lower by 0.86 percent and 1.31 percent, respectively.

Futures-led selling spread to other large-cap semiconductor stocks, with smartphone IC designer MediaTek Inc. down 0.78 percent to end at NT$1,275.00, and memory chip supplier Nanya Technology Corp. down 2.16 percent to close at NT$36.25.

In addition, Global Unichip Corp., TSMC's application-specific integrated circuit (ASIC) design subsidiary, shed 2.41 percent to end at NT$1,215.00.

On Wednesday, foreign institutional investors sold a net NT$32.16 billion worth of shares on the main board, according to the TWSE.

Bucking the downturn on the local main board, IC packaging and testing services provider ASE Technology Holding Co. rose 0.32 percent to close at NT$155.00, and Scientech Corp., TSMC's IC assembly equipment supplier, gained 0.23 percent to end at NT$433.50.

"Select AI-related stocks appeared resilient to offset the losses suffered by TSMC but trading value on the main board as a whole remained thin, indicating many investors preferred to sit idle and do nothing before Nvidia's investors' conference (to open Thursday morning Taipei time)," Lin said.

Second to TSMC in terms of market capitalization, iPhone assembler Hon Hai Precision Industry Co., which also rolls out AI servers, rose 1.23 percent to close at NT$206.00, and Quanta Computer Inc., another AI server supplier, gained 1.90 percent to end at NT$295.50.

"When TSMC traded in weakness, investors tended to set their sights on the old economy sector amid active rotational buying," Lin said. "Today, the biotech industry was highlighted."

Some shipping stocks extended their gains from a session earlier with container cargo shipper Yang Ming Transport Marine Corp. up 3.21 percent to close at NT$77.10, and rival Wan Hai Lines Ltd. up 1.61 percent to end at NT$94.80.

Elsewhere in the old economy sector, Formosa Plastics Corp. lost 0.98 percent to close at NT$45.30, and Nan Ya Plastics Corp. ended 1.33 percent lower at NT$40.90.

In the financial sector, which lost 0.25 percent, Fubon Financial Holding Co. fell 0.98 percent to close at NT$90.50, and Cathay Financial Holding Co. dropped 0.44 percent to end at NT$67.40.

"Despite the losses, it seemed that the Taiex still had solid technical support at the 60-day moving average now standing at around 22,540 points," Lin said.