TAIEX tumbles 3.59% as NT dollar falls

SPILLOVER: With foreign capital continuing to leave the market, traders expect the NT dollar, which fell NT$0.168, to face further depreciation pressure, an analyst said

• By Crystal Hsu / Staff reporter

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Taiwanese stocks yesterday plunged 3.59 percent, with the TAIEX recording its seventh-largest single-day point loss, while the New Taiwan dollar slid to a more than 18-month low against the US dollar, as a global technology sell-off and accelerating foreign fund withdrawals battered local financial markets.

The benchmark TAIEX fell 1,612.6 points to close at 43,307.54, with turnover reaching NT$928.058 billion (US$28.33 billion) and more than 1,000 listed stocks declining.

Concerns over returns on massive artificial intelligence (AI) investments have triggered a global retreat from technology shares, particularly US chipmakers, while uncertainty surrounding US midterm elections has added to investor caution.

A woman looks at a cellphone in front of an electronic stock board at the Taiwan Stock Exchange in Taipei on July 29.

Photo: CNA

In Asia, the MSCI AC Asia Pacific Index slipped 1.13 percent, while South Korea’s tech-heavy KOSPI slid 3.59 percent. The decline came after a gauge of US chipmakers extended a three-day rout, bringing its losses to 12 percent, while the NASDAQ 100 has fallen more than 10 percent from its peak, entering a technical correction.

The US yesterday held congressional elections, with a potential opposition victory posing a threat to the administration of US President Donald Trump by ending its control of one or both chambers of Congress and potentially jeopardizing his AI policy agenda.

Local shares are highly sensitive to Wall Street movements, particularly those of the technology-heavy NASDAQ and PHLX Semiconductor Index, which includes Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) American depositary receipts (ADRs).

The PHLX Semiconductor Index has tumbled 21.35 percent over the past month, while TSMC’s ADRs have slumped 15.68 percent, adding to the pressure on the TAIEX.

Foreign investors stepped up their retreat, joining local dealers in heavy selling. Foreign institutional investors recorded NT$107.31 billion in net sales yesterday while proprietary dealers sold another NT$59.06 billion, Taiwan Stock Exchange data showed. Investment trusts bucked the trend with net purchases of NT$19.91 billion.

The sell-off spilled over into the foreign-exchange market, sending the NT dollar down NT$0.168 to close at NT$32.760 against the US dollar in Taipei trading, its weakest level in more than 18 months, the central bank said.

Rising geopolitical tensions and stronger demand for safe-haven currencies have also weighed on the NT dollar, foreign-exchange analyst Lee Chi-chan (李其展) said.

Trading volume reached US$5.28 billion, the fourth-highest on record.

With foreign capital continuing to leave the market, there are no clear signs of an imminent rebound in the NT dollar, Lee said.

Currency traders expect the NT dollar to face further depreciation pressure, potentially testing the psychologically important NT$33 level as soon as today.

Despite the sharp correction, UOB Asset Management Taiwan Co (大華銀投信) said the ongoing volatility primarily reflected short-term investor sentiment and valuation adjustments rather than a meaningful deterioration in corporate fundamentals.

“The pullback has brought valuations of many semiconductor and electronics companies back to more reasonable levels,” UOB Asset Management Taiwan fund manager Kuo Hsiu-cheng (郭修誠) said.

The AI industry is gradually moving from a theme-driven investment cycle toward one supported by actual earnings, Kuo said.

Although investors have raised concerns that rising AI capital expenditure by major US technology companies could squeeze near-term free cash flow, order momentum remains healthy across cloud service providers, application-specific integrated circuits, high-performance computing and data-center supply chains, he said.

Additional reporting by Bloomberg