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Futures-led selling sends Taiwan shares lower

Futures-led selling sends Taiwan shares lower

Taipei, Oct. 7 (CNA) Shares in Taiwan extended their losses Tuesday from a session earlier as foreign investors dragged down the spot market to give a boost to their extensive holdings in the futures market, dealers said. Selling was most evident in the bellwether electronics sector, in which foreign investors hold relatively big stakes, with high-tech heavyweights such as Taiwan Semiconductor Manufacturing Co. (TSMC) and Hon Hai Precision Industry Co. taking hits, they said. Sentiment toward other sectors was also weak amid fears that foreign institutional investors would further reduce their holdings in Taiwan as part of a general strategy to move funds out of the region, dealers said. The weighted index on the Taiwan Stock Exchange ended down 54.33 points, or 0.59 percent, at 9,040.81, after moving between 8,993.45 and 9,074.80, on turnover of NT$74.68 billion (US$2.45 billion). The market opened down 0.32 percent in the wake of weakness on Wall Street overnight, and momentum to sell high-tech stocks stayed strong, reflecting the large volume of short-position contracts built up by foreign investors in the futures market, dealers said. The market's benchmark index fell below the 9,000-point mark at one point before bargain hunters turned active to pick up financial stocks, giving some support to the broader market and helping share prices rebound before the close, they said. "Many investors were shocked by the more than 30,000 short-position contracts amassed by foreign investors in the futures market as of Monday," President Securities analyst Vickie Hsieh said. "It was no surprise, therefore, that the spot market moved lower today because foreign investors wanted to make gains on their futures." The bellwether electronics sector was the main target of the selling as investors continued to lock in gains they had built up in the sector. The electronics sub-index closed down 0.86 percent, and the semiconductor sub-index ended 1.00 percent lower. TSMC, the most heavily weighted stock in the local market, fell 0.79 percent to close at NT$125.00, while integrated circuit designer MediaTek Inc. shed 2.25 percent to end at NT$455.50, even though the company reported record high sales for the third quarter. Hon Hai, the world's largest contract electronics maker, lost 0.91 percent to close at NT$97.60, and smartphone camera lens supplier Largan Precision Co. closed down 2.74 percent at NT$2,305.00. The two companies are part of Apple Inc.'s supply chain. Hsieh said market sentiment was also hurt by concerns that foreign investors will repatriate their funds out of the region and chase U.S. dollar assets because of expectations that the greenback will continue to appreciate. But one sector remained above the fray and outperformed the broader market, she said. "The financial sector seemed resilient. I suspect that government-led funds bought into financial stocks today to prevent the index from falling further," Hsieh said. The financial sub-index ended down only 0.09 percent. Among winning financial stocks, Fubon Financial Holding Co. rose 0.84 percent to close at NT$48.20, and Mega Financial Holding Co. rose 0.20 percent to end at NT$24.90. "I expect the local bourse will remain in consolidation mode over the next few sessions as investors wait for major electronics firms to release their latest sales data," Hsieh said. (By Frances Huang)


Updated : 2021-01-23 16:17 GMT+08:00