Chinese Nationalist Party (KMT) Legislator Lin Te-fu (林德福) yesterday raised concerns that the heavy weighting of contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is distorting the performance of the TAIEX.
Speaking at a meeting of the Legislative Yuan’s Finance Committee, Lin said the TAIEX has topped the 30,000-point mark for the first time in history, and TSMC, which accounts for more than 40 percent of total market value, served as a driver to the gains, but many other stocks remained weak.
"The market structure has lost its balance," Lin said. "Many investors who do not hold TSMC cannot share in the benefits created by the TAIEX’s rise."
Photo: CNA
On Monday, the TAIEX soared 755.23 points, or 2.57 percent, to close at 30,105.04 as TSMC surged 5.36 percent to close at a record high of NT$1,670 amid optimism over the artificial intelligence (AI) boom. The stock’s gains contributed about 680 points to the TAIEX’s rise.
Despite the significant gains, 749 stocks fell on the main board on Monday with only 156 stocks moving higher. On the over-the-counter (OTC) market, 649 stocks lost steam, while 158 moved higher.
On Tuesday, TSMC rose 2.1 percent to close at a new high of NT$1,705. The rise contributed about 280 points to the TAIEX’s rise and helped push the benchmark index to end at another high of 30,576.3.
Yesterday, TSMC closed at NT$1,675, down 1.76 percent on profit taking, pushing the TAIEX lower by 0.46 percent. Without TSMC, the index would have posted gains.
Lin said with TSMC, which has remained above its 240-day moving average of around NT$1,173, attracting most of the spotlight, 1,263 out of the 1,947 companies (64.87 percent) listed on the local main board and the OTC market still moved below their 240-day moving average, indicating they are in weakness.
The lawmaker said that as a result of US tariff policies, many companies in the old economy sector have come under pressure and are even struggling to survive.
If fears that an AI bubble will burst become a reality, the local stock market will be severely impacted with many investors hurt, he added.
When asked whether the Financial Supervisory Commission (FSC) is prepared for the worst in the market, FSC Chairman Peng Jin-long (彭金隆) said the capital market is full of uncertainties and the commission is prepared to take on such uncertainties as "that is our regular task."
The FSC has instructed the Taiwan Stock Exchange (TWSE) and the Taipei Exchange to serve as a market maker by promoting listed companies with sound fundamentals to attract the attention of investors thereby making these stocks more liquid for trading, Peng said.
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