Taipei--Shares in Taiwan closed moderately lower Wednesday in consolidation mode as settlement of August futures brought volatility to the spot market throughout the session, dealers said.
The futures-led selling pushed down select large-cap stocks in the bellwether electronics sector, such as contract chip maker Taiwan Semiconductor Manufacturing Co. (TSMC, ???), while old economy shares generally trended higher to lend some support to the broader market, they said.
The weighted index on the Taiwan Stock Exchange closed down 20.77 points, or 0.20 percent, at 10,290.39, after moving between 10,245.72 and 10,322.38, on turnover of NT$99.734 billion (US$3.29 billion).
The market opened down 8.33 points in reaction to a mixed Wall Street, where the Dow Jones Industrial Average closed up 0.02 percent but the tech-heavy NASDAQ index ended down 0.11 percent overnight, dealers said.
Selling increased as investors took their cue from volatility on the futures market to continue offloading market heavyweights. However, with the weighted index falling closer to the nearest technical support at about 10,240 points, bargain hunters entered the fray to cap the downturn by the end of the session, they said.
"Yesterday's gains were just technical. Without any fresh leads, the main board fell into consolidation mode, moving in a narrow range today," said Mega International Investment Services Corp. analyst Alex Huang.
In addition to a lackluster Wall Street, the main market was affected by selling on the futures market as foreign institutional investors sold stocks on the spot market to profit from futures, Huang said.
"Foreign institutional investors cut their holdings in long position contracts in futures in recent sessions, indicating they have turned cautious about the movement of the spot market down the road," he added.
According to Huang, foreign institutional investors hold about 35,000 more long position contracts than short position contracts as of Tuesday, down from a peak of about 80,000 at the end of January.
Huang said that large cap stocks in the electronics sector were a focus of the selling, led by TSMC, the most heavily weighted stock on the local market, which fell 0.47 percent to close at NT$213.00, off an early low of NT$211.00, with 25.18 million shares changing hands.
Also in the high-tech sector, shares in Hon Hai Precision Industry Co. (??), an iPhone and iPad assembler, fell 0.43 percent to end at NT$115.00 after hitting a low of NT$114.50, while Largan Precision Co. (???), a smartphone camera lens supplier, lost 0.63 percent to close at NT$5,565.00, off an early low of NT$5,560.00.
"The losses incurred by these stocks were capped due to bargain hunting seen in the late trading session. I think some investors remain willing to buy at lows for the moment," Huang said.
Underperforming the broader market, integrated circuit packaging and testing firm Advanced Semiconductor Engineering Inc. (???) fell 1.20 percent to close at NT$37.15 and smaller rival ChipMos Technologies Inc. (??) lost 1.15 percent to end at NT$25.75 after theier plants had been forced to shut down by a nationwide power outage on Tuesday .
In the old economy sector, which received a boost from bargain hunting, shares in Wei Chuan Foods Corp. (??) rose 2.79 percent to close at NT$18.45 and rival Uni-President Enterprises Corp. (??) was up 0.51 percent to end at NT$59.40, while Taiwan Cement Corp. (??) gained 0.29 percent to close at NT$34.35.
"Consolidation is expected to dictate the direction of the main board as investors lack incentives to trade with the political tension between the United States and North Korea eased," Huang said. "The weighted index could move between 10,200 and 10,400 in the short term."
Source: Focus Taiwan News Channel