Wed, Jul 29, 2026 page9

• TAIEX takes 3rd-largest hit on record

  CRASH DIVE: Tech stocks across Asia are taking it in the teeth among war-induced uncertainties, worries about a bubble and more, as the TAIEX plunged precipitously

  • By Crystal Hsu / Staff reporter
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  The TAIEX suffered its third-largest point decline on record yesterday as investors continued a global retreat from tech shares amid concerns over the artificial intelligence (AI) boom, plunging 2,030.83 points, or 4.65 percent, to close at 41,603.36.

  The loss was exacerbated by a sharp selloff in global semiconductor stocks that triggered broad-based risk aversion across Asian markets, CTBC Securities Investment Service Co (中國信託證券投顧) said.

  The decline was driven mainly by market positioning rather than a deterioration in corporate fundamentals, CTBC said, citing the unwinding of leveraged trades and automated trading.

  

  A woman walks in front of an electronic stock board at the Taiwan Stock Exchange in Taipei on March 2.

  Photo: Fang Pin-chao, Taipei Times

  “The selloff reflected panic in global markets, forced deleveraging and cascading program-driven selling that created a temporary liquidity imbalance, rather than any meaningful deterioration in corporate earnings or the long-term outlook for technology companies,” it said.

  The rout spread across the region, with South Korea’s KOSPI — the hardest-hit market — slumping 10.84 percent, while Japan’s Nikkei 225 fell 3.95 percent.

  In Taipei, the technology sector bore the brunt of the selling, with Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest producer of advanced chips, down 2.98 percent despite the company raising its sales outlook and signaling continued strong demand.

  Selling quickly spread beyond chipmakers, affecting memory manufacturers, silicon wafer suppliers, IC designers and other AI-related stocks. Turnover did not reach levels typically associated with a capitulation, with trading volume reaching NT$809.482 billion (US$25 billion), Taiwan Stock Exchange data showed.

  Foreign investors led the selloff, dumping a net NT$87.56 billion of Taiwanese shares on the main board, and proprietary traders recorded net selling of NT$31.73 billion, while mutual funds were net buyers of NT$2.35 billion, the exchange’s data showed.

  The retreat reflected growing investor concerns over the sustainability of the AI-driven rally, according to a Bank of America global fund manager survey, which showed that while confidence in markets remained resilient, worries over crowded positions in semiconductor and AI-related stocks had risen sharply.

  The survey found that 82 percent of fund managers viewed the long semiconductor trade as overcrowded, while about 45 percent cited AI as a potential bubble risk — the biggest tail risk identified by investors, ahead of concerns over “a second wave of inflation,” cited by 26 percent.

  JP Morgan Asset Management’s Taiwan unit said the findings highlight a widening gap among investors: confidence in AI’s long-term growth prospects remains strong, but institutions are becoming increasingly cautious about stretched valuations and concentrated positions that could magnify market swings.

  The selloff underscores a key challenge for Taiwan’s market: while AI demand continues to support economic growth and corporate earnings, investors are becoming increasingly focused on whether the pace of investment and current valuations are sustainable, it said.
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