Taiwan Stocks Fall Below the Quarterly Average as Foreign Investors Sell NT$81.656 Billion

Preface

Taiwan’s stock market reversed sharply on the 22nd, giving up an early recovery above 47,000 points and ending at its lowest level of the day. The decline pushed the benchmark below its quarterly moving average, while trading value remained elevated and the three major institutional investor groups recorded combined net selling exceeding NT$1,000 billion. Foreign investors accounted for most of the selling and also increased their net short position in Taiwan index futures.

This article reviews the market’s performance, institutional flows, Taiwan Semiconductor Manufacturing Company’s (2330-TW) share movement, foreign-exchange trading, and the stocks most actively bought and sold by each investor group. It also outlines a securities analyst’s explanation for the sell-off, including concerns about a possible typhoon-related market closure and continuing uncertainty in international markets.

Lazy bag

Taiwan’s benchmark closed at 46,041.43, down 846.34 points, after fluctuating by 1,290.75 points during the session. It fell below the quarterly moving average, with trading value at NT$879.231 billion. The three major institutional investors sold a combined NT$100.16 billion. Foreign investors were net sellers of NT$81.656 billion and added 1,221 contracts to their net short position in index futures, bringing it to 87,297 contracts. TSMC closed at NT$2,385, down NT$35, as foreign investors sold 12,695 shares lots. Market participants were also cautious about Typhoon Champi and international uncertainty.

Main Body

Taiwan’s equity market initially attempted to recover on the 22nd, with the benchmark briefly moving back above the 47,000-point level. The rebound did not hold. After midday, selling pressure intensified and the index’s decline widened through the rest of the session. The benchmark moved within a range of 1,290.75 points and finished at 46,041.43, its low for the day. It fell 846.34 points and closed below the quarterly moving average, a technical level that investors often monitor as an indication of the market’s medium-term trend. Total trading value was NT$879.231 billion.

The session’s move from an early recovery to a weak close reflected a change in risk appetite as the day progressed. Rather than sustaining gains above 47,000, the market faced increasing pressure after midday. The close at the day’s low indicated that buyers did not meaningfully offset the late-session selling. While the index’s wide intraday range showed substantial volatility, the available market figures do not establish a single cause for each price movement. The reported analyst commentary instead points to several concerns that may have contributed to investors’ decision to reduce holdings.

The three major institutional investor groups were net sellers in the cash market, with combined selling of NT$100.16 billion. Foreign investors recorded net sales of NT$81.656 billion, the largest negative balance among the three groups. Investment trusts moved in the opposite direction, posting net purchases of NT$8.875 billion. Proprietary dealers sold NT$27.378 billion. These flows show that buying by investment trusts was not enough to offset the selling by foreign investors and proprietary dealers.

Foreign investors also turned more bearish in Taiwan index futures. Their net short position increased by 1,221 contracts to 87,297 contracts. A larger net short position indicates that foreign investors held more futures contracts on the short side than before; it does not, by itself, prove what they expect the market to do next. Considered alongside their substantial cash-market selling, however, the increase offered another sign that foreign investors were positioning more cautiously during the session.

Shares of Taiwan Semiconductor Manufacturing Company (TSMC; 2330-TW), Taiwan’s largest listed company by market capitalization, were among the prominent targets of foreign selling. TSMC rose by as much as 0.62% in the morning, reaching NT$2,435. The stock subsequently came under pressure and fell below NT$2,400 after midday. It ended at NT$2,385, down NT$35 from the previous day, or 1.45%, on trading volume of 22,000 lots. Foreign investors sold another 12,695 lots, with the value of their net sales reaching NT$30.484 billion. The stock’s reversal from its intraday high accompanied the broader market’s afternoon weakening.

In the foreign-exchange market, the U.S. dollar closed at NT$32.508 against the New Taiwan dollar on the 22nd, representing a depreciation of 2 cents for the New Taiwan dollar. Trading value totaled US$2.77 billion. The New Taiwan dollar opened at NT$32.470. During the session, it reached a high of NT$32.450 and a low of NT$32.642. These figures describe the day’s exchange-rate range and closing level; the reported market information does not attribute the currency’s movement to any one factor.

Foreign investors’ larger purchases in the main market included Taiwan Cement, Taiwan Glass, China Steel, Taishin Financial Holding, Formosa Petrochemical, Chang Hwa Bank, Tongtai Machine & Tool, First Financial Holding, E.Sun Financial Holding, and Acer. Their larger sales included AUO, Nan Ya Plastics, Formosa Plastics, Yageo*, TSMC, King Yuan Electronics, Walsin Technology, AmTRAN Technology, China Petrochemical Development, and KGI Financial Holding. This list shows a varied pattern of trading across sectors rather than uniform buying or selling of every type of stock.

Investment trusts’ larger purchases included AUO, Taiwan Cement, Taiwan Glass, ASE Technology Holding, Walsin Technology, Far Eastern New Century, Powerchip Semiconductor Manufacturing, Chunghwa Telecom, Unimicron, and TSMC. Their larger sales included United Microelectronics, Formosa Petrochemical, Wistron, EVA Air, CTBC Financial Holding, E.Sun Financial Holding, Nanya Technology, TXC, Uni-President Enterprises, and Taishin Financial Holding. Investment trusts therefore bought some stocks that foreign investors sold, including AUO and Taiwan Cement, while the groups also both appeared among the buyers of TSMC.

Proprietary dealers’ larger purchases were in Hua Nan Financial Holdings, Mega Financial Holding, SinoPac Financial Holdings, Taishin Financial Holding, KGI Financial Holding, E.Sun Financial Holding, CTBC Financial Holding, Taiwan Cement, Yuanta Financial Holding, and Innolux. Their larger sales were concentrated in AUO. These reported lists capture the stocks with relatively substantial buying or selling by each institutional group; they do not, on their own, describe the investors’ motivations or the full scale of activity in each security.

Senior securities analyst Chien Po-yi attributed the market’s rise-and-fall pattern partly to heightened concerns about weather and overseas risks. Taiwan’s Central Weather Administration issued a land typhoon warning for Typhoon Champi at 11:30 a.m. on the 22nd. According to Chien, investors worried that the approaching typhoon could lead to the market being closed for several consecutive days. The possibility of an interruption to trading may have encouraged some investors to reduce their holdings rather than maintain their usual exposure.

Chien also cited continuing uncertainties in international markets. Although Taiwan stocks had rebounded the previous day and moved above the 5-day moving average, the combination of typhoon concerns and overseas uncertainty increased investors’ awareness of risk. In his assessment, that shift helped create selling pressure during the session and contributed to the benchmark’s decline after midday. The explanation is an analyst’s interpretation of the day’s trading, not a guarantee that weather or international developments alone determined market prices.

Overall, the session combined a sharp benchmark decline, substantial institutional net selling, a larger foreign-investor futures short position, and weakness in TSMC. The early move above 47,000 failed to persist, and the index ended below the quarterly moving average at its intraday low. The reported figures also show differences among investor groups: investment trusts were net buyers in the cash market, while foreign investors and proprietary dealers were net sellers. Against a backdrop of typhoon-related concerns and international uncertainty, the day’s trading reflected a broad increase in caution.

Key Insights Table