The TAIEX yesterday plunged an unprecedented 8.35 percent, or 1,807.21 points, to close at 19,830.88, with major artificial intelligence (AI) firms falling by the daily 10 percent limit amid reports of economic weakness in the US and heightened geopolitical tensions, analysts said.
The crash came amid panic sell-offs across Asian bourses and almost wiped out the gains seen earlier this year, with the benchmark falling below the psychological 20,000-point mark.
Foreign institutional investors offloaded NT$69.96 billion of local shares yesterday, compared with a record-high NT$96.66 billion on Friday, Taiwan Stock Exchange Corp data showed.
Photo: Taipei Times
The exchange urged investors at an emergency news conference to stay calm, saying it would introduce stabilizing measures if necessary.
“We don’t see the need for such measures at present,” Taiwan Stock Exchange Corp president Chien Lih-chung (簡立忠) said, adding that Taiwan’s economy remains on course for a healthy recovery.
Companies in the AI supply chain bore the brunt, as Nvidia Corp postponed the delivery of the latest chips in its Blackwell series due to a design defect.
Shares of Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, tumbled 9.75 percent to NT$815 after touching the 10 percent limit.
As TSMC accounts for more than 30 percent of the TAIEX, its loss contributed about 710 points alone to the benchmark’s fall, exchange data showed.
That underscored how quickly sentiment has pivoted from the potential of AI to focusing on the risks of a US recession and disappointing earnings outlooks from companies including Intel Corp, analysts said.
Taiwan, South Korea and Japan were the worst stock performers in Asia yesterday, a reflection of their export-oriented economies and their reliance on the world’s biggest economy, they said.
“Taiwan has been one of the best-performing markets this year together with Japanese equities, driven by a combination of cheap funding through the Japanese yen and strong sentiment around AI,” Saxo Bank head of equity strategy Peter Garnry said. “With both factors reversing now, a lot of traders are exiting with their gains. I think it is a classic momentum crash, which is a well-studied phenomenon.”
Tech news outlet The Information last week reported that Nvidia had told customers that the rollout of the most advanced chips in its Blackwell series would be delayed by three months or longer due to unexpected design flaws.
AI server suppliers Hon Hai Precision Industry Co (鴻海精密), Quanta Computer Inc (廣達) and Wistron Corp (緯創) fared even worse than TSMC, closing down by the daily limit, exchange data showed.
The Ministry of Finance, which is responsible for the activation of the NT$500 billion National Stabilization Fund, said it would closely monitor developments on domestic and overseas markets.
The Financial Supervisory Commission said it would intervene in the market once investors’ collateral to loan ratio falls below 150. Exchange data showed that the ratio was 163.54 on Friday.
First Securities Investment Trust Co (第一金投信) yesterday issued a report advising investors to lower their stock positions, noting that sentiment has taken a negative shift, while heightening tensions over a military conflict in the Middle East had added to the jitters, Masterlink Securities Investment Advisory (元富投顧) said.
Additional reporting by Bloomberg and CNA
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