Taiwan Index Loses 1,612.60 Points as Tech Shares, AI Concerns Weigh
Key Facts
Taiwan’s Taiex ended Tuesday, November 3, down 1,612.60 points, or 3.59%, at 43,307.54 points, its seventh-largest daily point loss. The decline extended the index’s losing streak to a fourth consecutive day, taking it to its lowest level since July 30. The session’s trading showed the retreat broadening, with the index moving between 43,191.58 and 44,614.64 points. Trading value rose to 928.06 billion Taiwan dollars, compared with 799.69 billion in Monday’s session. Foreign institutional investors also recorded net sales of 107.31 billion Taiwan dollars in the main market.
Technology shares bore the brunt of the pressure, with the electronic technology index falling 3.9% amid concerns over the scale of spending on AI infrastructure. TSMC fell 1.5%, despite accounting for more than 40% of the market’s capitalization. MediaTek dropped 7.43% to 3,675 Taiwan dollars, while ASE Technology declined 8.61% to 816 dollars. Nanya Technology fell 10%, the daily limit, to 411 Taiwan dollars. Losses also extended to Delta Electronics and Unimicron Technology, which fell 6.3% and 9.5%, respectively.
An analyst at Concord Securities said the broadening of trading reflected investors’ efforts to cut holdings out of panic, as concerns over AI investments persisted. Market pressure followed losses in the previous U.S. session, when the Philadelphia Semiconductor Index fell 3.37% and the Nasdaq dropped 1.07%. The analyst added that higher yields could raise fundraising costs for major cloud service providers and make it harder for them to earn satisfactory returns on their investments. Concerns center on whether massive spending on AI data centers will generate enough productivity and profits to justify its scale. More broadly, Bank of America analysts said equity outflows from Korea and Taiwan remained dominant in Asia as concerns grew over the sustainability of the technology cycle.
Tuesday’s losses followed a difficult October for the index, which fell 2,728.3 points, or 5.69%, its worst October performance on record. An analyst attributed the monthly decline mainly to a correction in the Philadelphia Semiconductor Index, rather than a deterioration in the domestic market’s fundamentals. The combined market capitalization of listed companies fell to 148.03 trillion Taiwan dollars on October 30, from 156.81 trillion at the start of the month. Foreign institutional investors also recorded net sales of 994.3 billion Taiwan dollars during October, reducing their holdings in TSMC, MediaTek and Delta Electronics. In the immediately preceding session, on Monday, the index had fallen 291.69 points, or 0.65%, to 44,920.14 points, with net foreign sales of 73.52 billion Taiwan dollars.
Before the close, Reuters reported that Taiwanese stocks had fallen 3.3% during trading and that the index was down 13.1% from its record high in early October. Closing data put the daily decline at 3.59%. In U.S. markets, the S&P 500 ended Monday’s session down 0.5% after erasing an earlier gain of 1.1%, while the Nasdaq fell 1.1% and the Dow Jones rose 0.4%. Bank of America analysts said outflows from Korea and Taiwan reflected growing concerns about the sustainability of the technology cycle. By the following day, investors were expected to get indications of the impact of the U.S. midterm elections and the U.S. Treasury’s quarterly refunding announcement, according to ING analysts.
An analyst at Concord Securities warned that weak technical conditions could open the door to further losses, with the index potentially testing the 39,384-point level. That level is the index’s low during the July 29 session. The warning follows four consecutive days of declines and comes after the index reached its lowest level since July 30. Concerns over AI spending and higher funding costs remain among the factors analysts have cited in explaining pressure on technology shares. Foreign investors also remained net sellers in the session, following substantial net sales during October.