Taipei:Shares in Taiwan experienced their sixth-steepest single-day point loss on Thursday, plunging over 1,600 points. This decline was led by tech stocks, which were affected by market fears of a potential Federal Reserve interest rate hike following the release of higher-than-expected inflation data from the United States.
According to Focus Taiwan, the Taiex, Taiwan Stock Exchange's benchmark index, closed down 1,655.96 points, or 3.41 percent, at 46,969.87. The index fluctuated between 46,795.38 and 48,382.75 during the trading session. The turnover reached NT$1.32 trillion (US$40.98 billion), a notable increase compared to NT$978.14 billion on Wednesday.
Hua Nan Securities analyst Kevin Su commented on the situation, noting that investors were disappointed with the U.S. September inflation data, which showed a 3.7 percent increase in the consumer price index (CPI), surpassing the market forecast of 3.6 percent. This disappointment led to concerns about a hawkish stance from the Federal Reserve, prompting investors to scramble and reduce their holdings in panic.
The heightened interest rates pose a challenge for AI companies by increasing fundraising costs. Kevin Su pointed out that the already high valuations of tech stocks exacerbated the negative sentiment, causing a significant drop in their prices. Additionally, losses in semiconductor stocks in the Tokyo and Seoul markets contributed to selling pressure in Taipei.
Taiwan Semiconductor Manufacturing Co. (TSMC), a major player with over 40 percent of the market's total value, saw its American depositary receipts decline by 3.40 percent, resulting in a 2.01 percent drop in its stock price to close at NT$2,440.00. The electronics index fell by 3.84 percent. Other tech firms also faced declines, with ASE Technology Holding Co. and MediaTek Inc. experiencing significant losses.
Su suggested that foreign institutional investors likely continued selling, moving their funds out of the local market. The Taiwan Stock Exchange reported that these investors sold a net NT$302.56 billion of shares on Thursday.
In response to the tech stock downturn, investors shifted their focus to defensive stocks. Chunghwa Telecom Co., Taiwan Mobile Co., and Far EasTone Telecommunications Co. all experienced gains. Meanwhile, rotational buying helped lift the financial sector, with E. Sun Financial Holding Co. and Mega Financial Holding Co. closing higher.
Su noted that the Taiex fell below the 20-day moving average of 48,041 points, indicating a technically fragile state with potential for further losses until the index nears 46,000 points.
