Economy

Taiwan Stocks Tumble in Wake of US Midterms

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By Justin Wu/Ted Chen

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Taiwan's stock market suffered a historic selloff on Friday, with the benchmark Taiex plunging more than 3,700 points at the opening bell, marking its biggest single-day drop on record. Although the index recovered some losses during the session, it still closed down 4.5% below the 40,000-point mark. The sharp decline came amid market concerns following the U.S. midterm elections, which have brought lawmakers into office who want to slow the expansion of AI data centers, raising questions about future demand for Taiwan-based suppliers. Taiwan Semiconductor Manufacturing Co. (TSMC), which accounts for roughly 40% of the Taiex, was at the center of the downturn. Its shares dropped 10% at the open before recovering slightly to end the day down 4.7%. President Lai Ching-te urged the public not to panic, saying the government was closely monitoring market developments and preparing policy responses. The volatility extended beyond equities. Taiwan's currency weakened against the U.S. dollar to its lowest level in more than a year and a half, prompting concerns among businesses about rising costs and potential price increases. Analysts said investors should watch the 52-week moving average, currently around 38,800 points, as a potential indicator that the market is approaching a more stable level.

After weeks of declines... it's another black Friday for Taiwan’s stock market as one blue chip stock after another drops.
The benchmark index, the Taiex, plunged more than 3,700 points at the open, the biggest single day drop on record.

Although it later recovered some of those losses, it still closed down 4.5 percent, at under 40,000 points.
The government is moving quickly to reassure the public.

LAI CHING-TE, TAIWAN PRESIDENT:
"The US midterm elections have just ended creating a new political situation so financial markets have reacted. That was to be expected. I ask the public not to panic over the past few days of market volatility. The government will watch every change closely and roll out policies at the same time."

The midterm elections in the US have placed lawmakers in office that want to pump the brakes on AI data centers... raising concerns about future demand for Taiwan-based suppliers.

TSMC was at the center of the storm. The Taiwanese chip maker represents about 40% of the Taiex, and its shares dropped 10 percent at Friday's opening.

They bounced back somewhat, but still ended the day down 4.7 percent.

It's not just the Taiex seeing volatility. Taiwan's currency has weakened against the greenback... hitting its lowest level in more than a year and a half.

And businesses are feeling it.

LIAO CHUAN-PING, CHAIR, TAIWAN ELECTRICAL APPLIANCE ASSOC.:
"[The New Taiwan dollar] has depreciated by roughly 8% to 9%. If manufacturers adjust their prices I think the increase will be at least 3% to 5%."

As the dust settles, analysts pointed to a technical indicator to watch for...the 52 week moving average.

CHEN LI-WEI, SENIOR ANALYST PRESIDENT CAPITAL MANAGEMENT:
"[The Taiex] has now returned to the 52-week moving average. Going forward, it will likely continue consolidating around that level."

With the 52-week moving average now sitting at around 38,800 points... Taiwan's market appears to be closer to a stable level.

Justin Wu and Ted Chen for TaiwanPlus.