Nomura Holdings Inc downgraded Taiwanese equities, citing greater scrutiny of the artificial intelligence (AI) sector and US President Donald Trump’s plans to impose tariffs on trading partners.
Taiwanese stocks were cut to “neutral” from a tactical “overweight” in Nomura’s Asian allocation given “concerns about tariffs, chip sector restrictions, greater AI thematic scrutiny, and elevated valuations and investor positioning,” strategists, including Chetan Seth, wrote in a note on Wednesday.
Taiwan’s equity benchmark has largely remained unchanged this year, with its biggest component — Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) — falling more than 3 percent.
Photo: CNA
That compares with a gain of 3.6 percent in the broader MSCI Asia Pacific Index over the same period.
The TAIEX fell 1.49 percent to 23,053.18 points yesterday, with TSMC dropping 1.89 percent, Taiwan Stock Exchange data showed.
Chinese start-up DeepSeek’s (深度求索) cost-effective AI model — which could rival leading US developers — is raising doubts if companies need to incur significant amounts of capital expenditure to develop such technology. That might weigh on TSMC — the main chip supplier to Apple Inc and Nvidia Corp.
In addition, Trump’s threat of tariffs on semiconductors has complicated Taiwan’s bid to remain a global powerhouse in semiconductor manufacturing and adds pressures on TSMC to move more of its production away from Taiwan.
The company is considering taking a controlling stake in Intel Corp’s factories at the request of Trump administration officials, Bloomberg News reported earlier this month.
Nomura strategists increased their year-end target for the MSCI China Index to 80 from 70, citing renewed investor interest in China’s technological innovation, such as DeepSeek, which “suggests that Chinese equities no longer warrant a deep discount.”
Since returning to the White House on Jan. 20, Trump has imposed a new 10 percent tariff on Chinese goods.
The downgrade comes at a time when China once again unveiled stronger language toward Taiwan, placing further pressure on stocks.
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