Foreign Capital Sells Heavily, Taiwan Stocks Drop Amid Domestic Institutional Support

The Taiwan Stock Exchange closed down 132.69 points on the 24th at 48,024.60 points, with turnover reaching NT$736.623 billion. Trading volume surged significantly during the session, indicating heightened volatility in investor sentiment. Notably, the three major institutional investor categories—foreign institutional investors, mainland Chinese investors, and domestic investment trust funds—net sold a combined NT$43.873 billion, while proprietary traders conversely registered a net purchase, creating a distinct divergence in capital flows.

As the most prominent external investors in the Taiwan stock market, foreign institutional investors typically base their decisions on global market trends. In recent weeks, interest rate hikes by the U.S. Federal Reserve and international market volatility have led to a decline in foreign investors' risk appetite toward Taiwan stocks. Mainland Chinese investors are largely influenced by mainland policies and economic data; recent economic slowdowns and policy adjustments in mainland China have also dampened their willingness to invest in the Taiwan market. Domestic investment trusts primarily focus on long-term investments, and recent re-evaluations of Taiwanese corporate earnings and industry prospects have led them to reduce holdings in certain targets, further driving up the net selling figure.

The net buying by proprietary traders indicates that domestic market investors continue to see short-term opportunities. Proprietary traders generally rely on technical analysis and short-term trading, and their net purchases may signal perceived current market undervaluation or an anticipation of an imminent rebound. In contrast to the three major institutional categories, net buying by proprietary traders often provides a degree of support amid short-term market fluctuations, mitigating the impact of selling pressure.

The capital flows of this session had a direct impact on overall market sentiment. Substantial net selling by foreign and mainland Chinese investors heightened risk-aversion sentiment in the market, prompting investors to avoid high-volatility sectors—such as semiconductors and electronic components—and instead shift toward defensive or interest-rate-sensitive stocks. Conversely, net buying by proprietary traders provided short-term support for certain growth stocks, preventing an excessive expansion of the market decline. If this trend persists, it could lead to intensified market volatility, and investors must carefully assess risks.

In the face of sustained net selling by foreign and mainland Chinese investors, the Financial Supervisory Commission and the Taiwan Stock Exchange could consider enhancing market information transparency and timely adjusting market mechanisms to maintain market stability. Meanwhile, investors should monitor macroeconomic data, interest rate trajectories, and corporate fundamentals, and appropriately adjust their portfolios to avoid unnecessary risks arising from short-term capital flows.

(Source: Central News Agency)