The TAIEX yesterday plunged 4.2 percent, or 906.99 points, to an eight-month low of 20,695.9 — its fourth-steepest single-day drop — as investors offloaded risky assets ahead of US President Donald Trump’s expected announcement of reciprocal tariffs on Wednesday.
The benchmark index lost 10.2 percent, or 2,357 points, last month, wiping out a modest 0.08 percent gain from the first two months of the year, as capital flight intensified.
Financial Supervisory Commission Chairman Peng Jin-lung (彭金隆) and Deputy Minister of Finance Frank Juan (阮清華) attributed the rout to global jitters over the proposed tariffs, which Trump said are aimed at addressing the US’ long-standing trade deficit.
Photo: CNA
The tariffs are expected to raise production costs and weigh on global growth — a negative development for Taiwan’s export-driven economy, said Juan, who also serves as executive secretary of the National Stabilization Fund committee.
The government would activate the NT$500 billion (US$15.07 billion) fund if necessary to support the local bourse, Juan told lawmakers at a meeting of the legislature’s Finance Committee.
Peng said that corporate earnings matter more in driving the TAIEX’s performance, and the recent market correction has made local equities more attractive, compared with the price-earnings ratio of 20.46 times in late February.
Heavyweight tech stocks bore the brunt of the sell-off. Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) dropped 4.41 percent, MediaTek Inc (聯發科) slid 5.12 percent and Hon Hai Precision Industry Co (鴻海精密), a major iPhone assembler, fell 5.19 percent.
Exchange-traded funds known for distributing quarterly cash dividends also sustained significant losses.
The capital flight exerted pressure on the New Taiwan dollar, which weakened NT$0.085 to close at NT$33.182 against the US dollar, central bank data showed.
Central bank Deputy Governor Chu Mei-lie (朱美麗) told lawmakers that the local currency remained relatively stable, depreciating just 1.09 percent against the US dollar last month, despite capital outflows exceeding NT$600 billion. By comparison, South Korea’s won fell 1.66 percent over the same period.
The Taiwan Stock Exchange yesterday urged investors to remain calm and assess external developments with caution and rationality, saying that strong global demand for chips used in the development of artificial intelligence has driven local semiconductor companies’ combined revenue to grow 25.42 percent year-on-year in the first two months of the year.
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