On Wednesday in Taiwan, the stock market witnessed a notable shift as shares initially showed gains but ultimately closed lower. This downturn was influenced by various factors, with selling pressure emerging prominently during the afternoon session. Dealers attributed this selling behavior to the settlement day of November futures contracts, which coincided with a relatively high level of short positions held by foreign institutional investors. As a result, many investors preferred to stay on the sidelines, waiting for the release of quarterly results and guidance from U.S.-based artificial intelligence chip designer Nvidia Corp.

Market Overview and Key Indices

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended down 160.44 points, or 0.70 percent, at 22,688.36 after moving between 22,622.47 and 22,977.56. Turnover totaled NT$376.88 billion (US$11.61 billion). The market opened up 0.11 percent and rose to the day’s high in the early morning session, following the previous session's gain of 1.34 percent. Investors took cues from a 1.04 percent increase on the tech-heavy Nasdaq index overnight and picked up large-cap electronics stocks. However, as the index neared the nearest technical resistance near 23,000 points, some investors shifted to the sell side. In the late afternoon session, the selling intensified, sending the broader market into negative territory. Investors rushed to trim their positions in contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) and other tech heavyweights due to futures settlement.

TSMC's Performance and Impact

TSMC, the most heavily weighted stock in the local market, lost 1.44 percent to close at NT$1,025.00 after hitting a high of NT$1,050.00. Its losses accounted for about 80 points in the Taiex’s decline and led the electronics index and semiconductor subindex lower by 0.86 percent and 1.31 percent, respectively. Futures-led selling also spread to other large-cap semiconductor stocks. Smartphone IC designer MediaTek Inc. dropped 0.78 percent to end at NT$1,275.00, and memory chip supplier Nanya Technology Corp. fell 2.16 percent to close at NT$36.25. Global Unichip Corp., TSMC’s application-specific integrated circuit (ASIC) design subsidiary, shed 2.41 percent to end at NT$1,215.00.

Other Market Performances

Bucking the downturn on the local main board, IC packaging and testing services provider ASE Technology Holding Co. rose 0.32 percent to close at NT$155.00, and Scientech Corp., TSMC’s IC assembly equipment supplier, gained 0.23 percent to end at NT$433.50. Second to TSMC in terms of market capitalization, iPhone assembler Hon Hai Precision Industry Co., which also rolls out AI servers, rose 1.23 percent to close at NT$206.00, and Quanta Computer Inc., another AI server supplier, gained 1.90 percent to end at NT$295.50. Some shipping stocks extended their gains from the previous session. Container cargo shipper Yang Ming Transport Marine Corp. rose 3.21 percent to close at NT$77.10, and rival Wan Hai Lines Ltd. increased 1.61 percent to end at NT$94.80. In the old economy sector, Formosa Plastics Corp. lost 0.98 percent to close at NT$45.30, and Nan Ya Plastics Corp. ended 1.33 percent lower at NT$40.90. In the financial sector, which lost 0.25 percent, Fubon Financial Holding Co. fell 0.98 percent to close at NT$90.50, and Cathay Financial Holding Co. dropped 0.44 percent to end at NT$67.40.Despite the losses, it seemed that the Taiex still had solid technical support at the 60-day moving average now standing at around 22,540 points. This indicates that the market may have some underlying strength and could potentially recover in the future.