Taiex sees second biggest fall in history, as TSMC plummets

Taipei, July 26 (CNA) Shares in Taiwan registered their second steepest point fall in history Friday as contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) plunged more than 5.6 percent amid volatility among tech stocks on American markets, dealers said.

The Taiex, the Taiwan Stock Exchange's benchmark weighted index, ended down 752.63 points, or 3.29 percent, at 22,119.21, after moving between 21,889.61 and 22,206.93. Turnover totaled NT$468.47 billion (US$14.28 billion).

The 752.63-point tumble at close was the second biggest in the Taiex's history, surpassed only by a fall of 774.08 points on April 19.

The market opened down 664.91 points, or 2.91 percent, as TSMC came under heavy downward pressure after its American depositary receipts fell 3.7 percent and 5.9 percent, respectively, on Tuesday and Wednesday, ahead of a mild rebound of 0.3 percent Thursday.

It quickly slid to the day's low within three minutes, before rebounding and then trading within a relatively narrow range until the end of the session.

The 982.23-point slide to the day's low was also the third highest intraday fall on record, behind a 1,417.86-point loss on May 12, 2021 and a 1,009.32 point tumble on April 19, 2024.

"Volatility among the tech stocks on U.S. markets paved the path for the big drop in the local electronics sector today amid concerns about when large spending on artificial intelligence development will pay off," Mega International Investment Services Corp. analyst Alex Huang said.

Overnight, the CEO of Google parent Alphabet, Sundar Pichai, sidestepped a question at an investor conference about when analysts would start seeing a return on investments in AI applications, even as the company said it was seeing higher revenue from its cloud services.

Amid those doubts, the tech-heavy Nasdaq index lost 0.93 percent Thursday after a 3.64 percent plunge on Wednesday.

TSMC, tech stocks

In Taiwan, TSMC, the most heavily weighted stock in the local market, lost 5.62 percent to close at NT$924.00, contributing about 445 points alone to the Taiex's decline on Friday.

Its fall also contributed to a 4.28 percent decline in the electronics index and a 4.98 percent fall in the semiconductor sub-index, respectively.

"It seems to me that TSMC has seen near-term technical support ahead of the 60-day moving average of NT$910.00," Huang said.

"The company's fundamentals remain sound as investments in AI hardware devices will continue and with the stock moving closer to NT$910, good investment opportunities are emerging."

MasterLink Securities analyst Tom Tang agreed, saying TSMC was forecast to rake in NT$41.63 in earnings per share in 2024, and if the stock were to fall to NT$900, it would be trading at an "attractive" price to earnings multiple of around 21.

The selling in TSMC spread to other semiconductor stocks, with IC packaging and testing services provider ASE Technology Holding Co. tumbling 10 percent, the maximum daily increase, to end at NT$155.50.

Smartphone IC designer MediaTek Inc. shed 2.35 percent to close at NT$1,245.00, and Alchip Technologies Ltd, a major application specific integrated circuit (ASIC) designer, lost 4.78 percent to end at NT$2,690.00.

Also in the tech sector, AI server maker Quanta Computer Inc. lost 7.41 percent to close at NT$275.00, and iPhone assembler Hon Hai Precision Industry Co., second to TSMC in terms of market value, shed 4.71 percent to end at NT$192.00.

Telecom, old economy, financial sectors

While tech sector shares were largely down, telecom stocks held their own, Huang said, referring to stocks such as Chunghwa Telecom Co., which rose 0.82 percent to close at NT$122.50, and Far EasTone Telecommunications Co., which gained 0.70 percent to end at NT$86.40.

"In line with the broader market, old economy and financial stocks were largely down," Huang said. "With investors in a cautious mood, it was understandable."

In the electric machinery industry, which lost 4.82 percent, Shihlin Electric & Engineering Corp. slid 5.37 percent to close at NT$273.00, and Fortune Electric Co. shed 8.72 percent to end at NT$775.00.

Elsewhere in the old economy sector, food brand Uni-President Enterprises Corp. lost 1.47 percent to close at NT$87.20, and cooking oil supplier Great Wall Enterprise Co. dropped 1.20 percent to end at NT$57.40.

The financial sector lost 1.27 percent, with E. Sun Financial Holding Co. down 3.74 percent to close at NT$27.00, and Yuanta Financial Holding Co. down 2.88 percent to end at NT$32.05.

Cathay Financial Holding Co. appeared resilient, closing unchanged at NT$61.50.

U.S. data to watch

The United States is scheduled to release the June Personal Consumption Expenditures Price Index (PCE) later in the day, and Huang said it should be closely watched, because it is "the index favored by the Federal Reserve to adjust its monetary policy."

According to the Taiwan Stock Exchange, foreign institutional investors sold a net NT$84.65 billion in shares on the market Friday.