Aug 5 2024: Taiwan’s stock market experienced a historic plunge of 8.4% on Monday, with significant losses in tech stocks, including TSMC, as investor concerns over the U.S. economy triggered a sell-off in one of Asia’s leading markets.
This marked the largest one-day percentage decline for the main index. The market fell by 1,807.21 points, closing at 19,830.88—the lowest level since April 23—as the tech sector’s downturn spread across the board.
“The timing of a recovery is uncertain. It’s too early to determine,” said David Wu, an analyst at Cathay Futures Consulting Department in Taipei.
Taiwan was among several markets that dropped on Monday due to fears of a potential U.S. recession, prompting investors to move away from risk assets.
In an effort to reassure investors, the head of the stock exchange stated that the bourse would collaborate with regulators to ensure stability.
“The exact timing for implementing stability measures will depend on market conditions, and we are awaiting regulatory instructions,” said Taiwan Stock Exchange President Lih-Chung Chien to reporters after the market closed.
Shares in TSMC, the world’s largest contract chipmaker, were heavily hit. The stock, which had surged over the past year due to high demand for AI-related chips, plummeted by 9.75%, nearing the daily limit of 10%, to close at T$815.
Some analysts noted that TSMC’s fundamentals remained strong despite market rumors of potential delays in delivering Nvidia’s new GB 200 chips. Taiwan’s three other major tech stocks also saw significant declines: Mediatek fell by 9%, while Quanta and Foxconn dropped close to the daily limit of 10%.
“We expect the decline to continue for the next couple of days, targeting technical support levels of 19,200-19,300 points,” said Allen Huang, vice president at Mega International Investment Services, to Reuters.
Out of nearly 1,900 companies listed on the main bourse and the smaller OTC exchange, about 800 had fallen by the maximum permissible amount, he added.
Earlier, Taiwan’s Minister of Economic Affairs, J.W. Kuo, advised investors to brace for a potential market downturn.