Taiwan stocks slip again as rebound stalls below quarterly average

Taiwan's stock market lost momentum on August 6 and August 7 after rebounding more than 5,300 points, or about 13.6%, from its July 31 low of 39,404. The TAIEX fell 214.90 points, or 0.48%, to 44,396.70 on August 6 as foreign net buying slowed to NT$2.02 billion from NT$90.3 billion a day earlier and foreign investors' net short futures position rose to 89,300 contracts, near a record high. On August 7, the index surged to an intraday high of 44,827 before reversing sharply and closing down 170.79 points, or 0.38%, at 44,225.91 on turnover of NT$820.7 billion, about $25.5 billion, leaving it below the quarterly moving average. The three major institutional investors turned net sellers by a combined NT$44.24 billion on August 7, led by foreign investors and mainland Chinese capital selling NT$40.72 billion, while investment trusts sold NT$2.56 billion and proprietary traders sold NT$968 million, including NT$1.69 billion of hedging-related sales offset by NT$717 million of proprietary-account buying. Selling was concentrated in panel and chip shares, with Innolux and Winbond accounting for more than 94,000 lots of combined unloading, while UMC and Powerchip were also heavily sold. Innolux fell 4.9% to NT$47.55 on volume of 270,800 lots after combined foreign and proprietary selling of 51,200 lots, and Winbond dropped more than 4% after foreign investors sold 43,300 lots. Foreign selling also extended to financials including First Financial, Taiwan Business Bank and Hua Nan Financial, as well as Macronix and Yageo. In contrast, foreign investors continued buying defensive and cyclical names including EVA Airways, which extended its net-buying streak to 23 sessions with another 22,000 lots purchased and closed up 2.66% at NT$44.40, along with Uni-President, Wistron, Taishin Shin Kong Financial, CTBC Financial, Far Eastern New Century and China Steel. Investment trusts focused purchases on China Airlines and Hua Nan Financial but sold Wistron and UMC. Analysts said the market's rapid rebound since late July has brought the index into a heavy resistance zone above 44,000 at the quarterly moving average, where profit-taking and long liquidation have intensified. Despite the reversal, the TAIEX still gained 1,106.16 points, or 2.57%, for the first week of August, and investors are now watching whether foreign outflows persist and whether the index can break through the quarterly moving average.