Taipei:Shares in Taiwan fell on Tuesday as the market prepared for the October futures contracts settlement date. Concerns arose that foreign institutional investors, holding a significant number of short positions, might sell in the spot market to profit from futures, according to dealers.

According to Focus Taiwan, the Taiex, Taiwan Stock Exchange's benchmark index, dropped 529.15 points, or 1.13 percent, closing at 46,292.93. The index fluctuated between 46,163.03 and 46,967.91, with a turnover of NT$758.68 billion (US$23.35 billion), down from NT$866.71 billion the previous day.

The index initially rose in the morning session, buoyed by a rebound in U.S. tech stocks. However, selling pressure soon spread across the board, resulting in a negative close. Analyst Adam Lin from Moore Securities Investment Consulting noted that foreign institutional investors held about 92,000 more short-position futures contracts than long-position contracts. Investors were cautious, reducing their holdings ahead of the settlement due to fears of further selling and capital outflow influenced by a stronger U.S. dollar.

Data from the Taiwan Stock Exchange showed foreign institutional investors sold a net NT$79.54 billion of shares on Tuesday, contributing to a net sell-off of NT$662.07 billion since the start of the month.

The semiconductor sector saw intensified selling, partly due to losses by South Korean memory chip suppliers Samsung Electronics Co. and SK Hynix Inc. In Taipei, memory chip producers Nanya Technology Corp. and Macronix International Co. dropped by 3.21 percent and 1.96 percent, respectively. MediaTek Inc. and Taiwan Semiconductor Manufacturing Co. (TSMC) also fell, with TSMC showing some resilience by closing down only 0.62 percent.

Other tech stocks such as Delta Electronics Inc. declined by 2.13 percent, while Hon Hai Precision Industry Co. managed a gain of 0.84 percent, defying the general downturn. Non-tech stocks were also impacted by foreign selling pressure, with Cathay Financial Holding Co. and Fubon Financial Holding Co. both experiencing losses.

Formosa Plastics Corp. and Nan Ya Plastics Corp. saw declines, alongside Hotai Motor Co. and Yulon Motor Co. Lin suggested that the smaller turnover indicated a cautious investor sentiment, with the Taiex potentially testing technical support at the 60-day moving average of 46,042 points.