Taiwan shares under heavy losses on futures-led sell-off

Taipei, Jan. 15 (CNA) Shares in Taiwan fell around 280 points Wednesday as heavy settlement-day selling emerged among foreign institutional investors with large short-position futures holdings, dealers said.

The Taiex, the Taiwan Stock Exchange's (TWSE) benchmark index, ended down 282.95 points, or 1.24 percent, at 22,514.57 after moving between 22,509.65 and 22,777.34. Turnover totaled NT$291.05 billion (US$8.83 billion).

Institutional investors -- who held 42,434 more short-position futures contracts than long-position contracts as of Tuesday -- "simply dumped stocks in the spot market on the settlement day" due to caution about market fluctuations, MasterLink Securities analyst Tom Tang said.

"The most efficient way to drag down the spot market was to cut holdings in Taiwan Semiconductor Manufacturing Co. (TSMC) [the local market's most heavily weighted stock], although I do not think the company has any problems in fundamentals," Tang said.

TSMC fell 2.01 percent to close at the day's low of NT$1,065.00. The stock's losses contributed about 200 points to the Taiex's decline and sent the electronics index down 1.66 percent.

Smaller chipmaker United Microelectronics Corp. closed down 1.89 percent at NT$41.45, while smartphone IC designer MediaTek Inc. rose 1.43 percent to end at NT$1,430.00.

iPhone assembler and artificial intelligence server maker Hon Hai Precision Industry Co., second to TSMC in terms of market value, shed 2.01 percent to close at the day's low of NT$171.00 following a 1.10 percent overnight loss for U.S.-based AI chip designer Nvidia Corp.

In addition, Quanta Computer Inc., another AI server maker, fell 2.35 percent to close at NT$260.00, and rival Wistron Corp. also lost 2.87 percent to end at NT$101.50.

"Select old economy stocks in the raw material industries stayed resilient as they appeared very cheap after recent heavy losses amid concerns over a global supply glut," Tang said. "Their gains were just technical in nature."

Among them, China Steel Corp., the largest steelmaker in Taiwan, rose 1.91 percent to close at NT$18.70, and Chung Hung Steel Corp. gained 4.48 percent to end at NT$17.50.

In addition, Formosa Plastics Corp. added 1.72 percent to close at NT$35.55, and Formosa Chemicals & Fibre Corp. ended up 3.30 percent at NT$28.15.

Elsewhere in the old economy sector, food brand Uni-President Enterprises Corp. lost 1.65 percent to close at NT$77.70, while Wei Chuan Foods Corp. added 0.29 percent to end at NT$17.55.

In the financial sector, which lost 0.21 percent, Cathay Financial Holding Co. shed 1.22 percent to close at NT$64.70, and Fubon Financial Holding Co. dropped 0.44 percent to end at NT$90.40.

"Investors had better pay close attention to the U.S. inflation data due later in the day," Tang said. "Moreover, TSMC's investor conference [slated for Thursday] is also worth watching. Both could move the markets."

According to the TWSE, foreign institutional investors sold a net NT$29.53 billion worth of shares on the main board Wednesday.