Taiwan Index Falls 4.51% to 39,701.64 After Record Early Loss
Key Facts
Taiwan’s benchmark stock index ended Friday, November 6, down 1,873.08 points, or 4.51%, at 39,701.64, after a sharp drop followed a record plunge at the start of trading. The Central News Agency of Taiwan said in a report published after the close that trading value reached 1.25 trillion New Taiwan dollars. The index had plunged 3,737.67 points within minutes of the open, falling below the 40,000 level. It then hit an intraday low of 37,837.05 shortly after trading began at 9 a.m. The session saw the market move from an early selling shock to a close below the 40,000 threshold, despite recovering from its intraday low.
The Central News Agency of Taiwan attributed the early sell-off to heavy losses on Wall Street and steep declines in Japan and South Korea, amid uncertainty over policies for AI data centers following the U.S. midterm elections. In the previous U.S. session, on Thursday, November 5, the Dow Jones Industrial Average lost 1,833.06 points, or 3.4%, to close at 51,523.06, according to The Associated Press. The Philadelphia Semiconductor Index also fell 12.2% overnight, while the Nasdaq was 12% below its record closing high set a month earlier, according to Reuters. The Associated Press linked pressure on AI stocks to concerns that data centers could face restrictions following Democratic victories in the midterm elections. These moves provide context for the decline in Asian technology stocks, while Taiwan’s news agency attributed the selling to those concerns and losses in regional markets.
Taiwan Semiconductor Manufacturing Co., known as TSMC, was at the center of the decline because of its weight in the market, accounting for more than 40% of total market capitalization, according to the Central News Agency of Taiwan. The stock fell to its daily limit of 2,020 New Taiwan dollars shortly after the open, down 220 New Taiwan dollars. The agency described the absolute price drop as the largest recorded for the stock during trading and estimated that the company’s market capitalization fell by 5.7 trillion New Taiwan dollars. Selling pressure on the market’s largest component coincided with declines in other chip and electronics manufacturing stocks. MediaTek touched its daily limit at 3,115 New Taiwan dollars, while Hon Hai Precision Industry, known globally as Foxconn, fell more than 9%.
The session followed net foreign institutional sales of 102.46 billion New Taiwan dollars in the main market on November 5, the 10th-largest recorded daily net sale, according to the Taiwan Stock Exchange as cited by the Central News Agency of Taiwan. That figure was for the previous session, while the index’s decline extended into Friday’s session and it closed at 39,701.64. In an earlier report on the near-term market outlook, a Taiwanese securities strategist said the index could trade between 40,000 and 42,000 points as sector rotation continued. But the index closed on November 6 below the bottom of that range, after falling below 40,000 during the session. The S&P 500 had risen 1.6% to 7,688.62 on November 4, before a sharp reversal the following day, according to The Associated Press.
Securities analysts warned that Taiwan’s index could face selling linked to margin calls, as investors who borrowed to buy stocks rush to sell their holdings, the Central News Agency of Taiwan reported. The analysts said investors should wait for technical signals that the market has stabilized. In a comment carried by Reuters on a potential market turning point, a strategist said turning points are often accompanied by sharp disagreement, reflected in large moves both up and down. The warning comes after the index fell to 37,837.05 within minutes of the open before closing at 39,701.64. It also coincided with TSMC and MediaTek shares falling to their daily limits and Foxconn losses exceeding 9%.