Local bourse declines on futures-led selling


TAIPEI — Shares in Taiwan ended lower Wednesday, below the 7,800 point mark, as investors cut their holdings in the spot market in a bid to profit in the futures market, where they had raised short-position contracts, dealers said.

Selling focused on large-cap electronics stocks, such as Taiwan Semiconductor Manufacturing Co. (TSMC) and Hon Hai Precision Industry Co., while the financial sector remained resilient on hopes that Taiwan and China will increase cross-Taiwan Strait financial exchanges, they said.

Market sentiment has been dampened by concerns over the debt problems in the eurozone, in particular after the Cyprus parliament voted against a tax on bank deposits that had been requested by the European Union in return for a bailout package for the country, they added.

The weighted index closed down 40.44 points, or 0.51 percent at 7,798.03, after moving between 7,786.56 and 7,844.54, on turnover of NT$73.68 billion (US$2.47 billion).

The market opened down 3.74 points as investors took cues from a lackluster Wall Street overnight amid lingering concern over the financial crisis in the eurozone, the dealers said.

Selling escalated to push down the index below 7,800 points at the end of the session as market heavyweights were targeted by foreign institutional investors, who served as net sellers of NT$13.67 billion- worth of local shares, they said.

“In the past few days, foreign investors had built up their short positions in the futures market. They simply unloaded large-cap stocks in the spot market for profit in futures,” Hua Nan Securities analyst Henry Miao said.

Among the losing electronics heavyweights, TSMC, the world’s largest contract chip-maker, fell 1.20 percent to NT$98.80, while Hon Hai Precision, which assembles iPhones and iPads for Apple Inc., lost 1.32 percent to end at NT$82.10.

Smartphone vendor HTC Corp. fell 1.00 percent to close at NT$246.50 after a court in Germany ruled that the Taiwanese firm infringed a patent asserted by rival Nokia.

In the old economy sector, food maker Uni-President Enterprises Corp. fell 1.02 percent to close at NT$58.20, while Formosa Plastics Corp. lost 1.38 percent to end at NT$71.50.

“The rejection of the tax levy by the parliament in Cyprus has thrown a bailout package planned for the country into doubt,” Miao said. “Many investors fear that the country will default, which could further impact the financial situation in the region.”

Miao said that after the index fell below 7,800 points, the local bourse became technically weaker and that it is possible the market will test the technical support level at around 7,600 points amid weak market confidence.

Bucking the downside of the broader market, the financial sector closed up 0.39 percent ahead of a meeting planned by the authorities on each side of the Taiwan Strait for April, which could reach an agreement to increase exchanges, the dealers said.

Cathay Financial Holding Co. rose 2.63 percent to close at NT$41.05, while Fubon Financial Holding Co. gained 0.36 percent to end at NT$41.85.