Taiex Rebounds to 40,000 Points Amid AI Spending Concerns

Taipei: Shares in Taiwan rebounded to the 40,000-point level by the close of trading Wednesday after late bargain hunting. Despite this recovery, the Taiex still posted a significant decline of over 1,500 points due to ongoing concerns about heavy investments in artificial intelligence, which weighed heavily on investor sentiment. According to Focus Taiwan, the Taiex, which serves as the benchmark index for the Taiwan Stock Exchange, closed down 1,564.18 points, or 3.76 percent, at 40,039.18. This drop marks the seventh-largest single-session point decline in its history, with the index hitting an intraday low of 39,384.85. The day's turnover reached NT$1.08 trillion (US$33.46 billion). Market analysts, like Adam Lin from Moore Securities Investment Consulting, noted that, similar to the U.S. markets, the Taiex and other tech-heavy regional markets, such as Seoul, faced pressure as investors hurried to secure recent significant gains driven by the AI surge. Lin explained that market sentiment has shifted du e to worries about massive AI spending potentially not delivering adequate returns, especially during a period of high valuations, making investors more sensitive to negative news. The bellwether electronics sector played a significant role in the Taiex's decline, with major contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) falling 3.51 percent to NT$2,200.00. This drop contributed approximately 640 points to the overall decline of the Taiex. Other tech stocks also suffered losses, with MediaTek Inc. down 4.98 percent at NT$3,150.00, and memory chip suppliers like Nanya Technology Corp. and Winbond Electronics Corp. both plunging 10 percent, hitting their daily decline limits. While bargain hunters showed interest in select tech stocks, some companies like Hon Hai Precision Industry Co. and Quanta Computer Inc. demonstrated resilience, experiencing only minor declines. Interestingly, Asustek Computer Inc. defied the downward trend by rising 3.54 percent to NT$761.00. Non-tech stocks were not immune to the pressure, with notable declines in companies like Formosa Plastics Corp. and Nan Ya Plastics Corp. However, some investors shifted funds into perceived safe havens, particularly in the retail sector, where President Chain Store Corp. and Far Eastern Department Stores Ltd. saw modest gains. In the financial sector, Fubon Financial Holding Co. and Cathay Financial Holding Co. experienced losses, while E. Sun Financial Holding Co. managed a slight increase. Lin remarked that the Taiex's recovery depends on the stabilization of the South Korean market and any signals from the U.S. Federal Reserve following its policy meeting. According to the Taiwan Stock Exchange, foreign institutional investors sold a net NT$22.25 billion worth of shares on the main board on Wednesday.