The TAIEX yesterday recorded its third-steepest fall in history, falling almost 1,000 points in a sell-off triggered by a tumble on Wall Street overnight amid growing concerns over the possible hard landing of the US economy, dealers said.
Technology stocks led the downturn on the main board as investors took their cues from a plunge in the shares of US-based artificial intelligence (AI) chip designer Nvidia Corp, which is facing an antitrust investigation by the US Department of Justice, dealers added.
The TAIEX closed down 999.46 points, or 4.52 percent, at 21,092.75, with the loss the third-sharpest fall after a drop of 1,807.21 points on Aug. 5 and a decline of 1,004.01 recorded on Aug. 2.
Photo: CNA
The heavy losses pushed the market capitalization of the main board down by NT$3.17 trillion (US$98.48 billion) to NT$67.36 trillion, the first time in nearly a month that market value fell below the NT$70 trillion mark.
Elsewhere in Asia, Japan’s benchmark Nikkei 225 index lost 4.2 percent and South Korea’s KOSPI was down 3.2 percent.
Australia’s S&P/ASX 200 was down 1.9 percent, Hong Kong’s Hang Seng index declined 1.1 percent and the Shanghai Composite index shed 0.7 percent.
The focus was on the monthly Institute for Supply Management (ISM) manufacturing survey data published on Tuesday, showing that the contraction in US manufacturing activity continued into a fifth consecutive month last month as demand remained weak.
The ISM manufacturing index was 47.2 percent, up 0.4 percentage points from a month earlier, but still well below the 50-point mark separating expansion from contraction.
The figure was slightly below market expectations of 47.9, according to Briefing.com.
“The latest manufacturing activity raised fears over a possible hard landing for the US economy, sending ripples through US stock markets overnight,” Mega International Investment Services Corp (兆豐國際投顧) analyst Alex Huang (黃國偉) said.
“More importantly, Nvidia shares reported a steep fall [of 9.53 percent] overnight as the US Department of Justice sent a subpoena to Nvidia to seek evidence that the chipmaker violated antitrust laws, which turned many investors away from tech stocks on US markets and on regional markets,” Huang said.
Coming under great pressure, contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) lost 5.43 percent to close at NT$889, its lowest closing level since Aug. 6. The stock contributed about 413 points to the TAIEX’s fall yesterday.
In the wake of Nvidia’s slump, AI-related stocks also moved sharply lower, with AI server maker Quanta Computer Inc (廣達) falling 8.09 percent and rival Wistron Corp (緯創) shedding 5.15 percent.
Foreign investors sold a net NT$100.75 billion of Taiwanese shares yesterday, a record daily outflow according to Bloomberg-compiled data that started in 2000.
“Taiwan’s and TSMC’s share performance have become increasingly correlated with Nividia’s over the past year, and recent market volatility is reflecting concerns on the AI demand outlook,” Bloomberg Intelligence strategist Marvin Chen said. “While the earnings growth for the chip sector still looks strong, valuations may be a near-term concern.”
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