Taipei, Feb. 3 (CNA) Shares in Taiwan tumbled 3.53 percent Monday, the first trading session of the Year of the Snake, amid escalating fears of a trade war and the emergence of a cheap model in the global AI sector during the Lunar New Year break, dealers said.
The bellwether electronics sector led the downturn in reaction to U.S. President Donald Trump's tariffs on Canada, Mexico and China and the disruption caused by China-based artificial intelligence startup DeepSeek and its low-cost AI model, dealers said.
The Taiex, the Taiwan Stock Exchange's weighted index, ended down 830.70 points, or 3.53 percent, at 22,694.71 after moving between 22,502.20 and 22,796.71. Turnover totaled NT$492.83 billion (US$14.84 billion).
The market opened down 728.70 points to plunge below the nearest technical support at around 23,000 points and fell further in the first five minutes to the day's low, as semiconductor stocks came under heavy pressure, dealers said.
Though the Taiex rebounded slightly after that, it remained close to 22,600 points the rest of the session.
Taiwan Semiconductor Manufacturing Co., the most heavily weighted stock on the market, fell NT$65, or 5.73 percent, to close at NT$1,070.00, the stock's second steepest decline in a single day after a NT$88 drop seen on Aug. 5, 2024.
TSMC's losses contributed about 520 points alone to the Taiex's fall.
"Local tech stocks simply played catch-up with their counterparts on U.S. markets in terms of the heavy losses seen during the Lunar New Year holiday, reflecting DeepSeek's disruption and Trump's massive tariffs," Concord Securities analyst Kerry Huang said.
"In Taiwan, investors have additional fears that Trump will impose tariffs on chips, so TSMC was in the spotlight," Huang said.
On Jan. 27, Trump said he had plans to impose sweeping tariffs on semiconductors, steel, aluminum, copper and pharmaceuticals "in the very near future."
Among other semiconductor stocks, IC packaging and testing services provider ASE Technology Holding Co. shed 9.04 percent to end at NT$161.00, and TSMC's IC assembly equipment supplier Scientech Corp. fell 8.22 percent to close at NT$346.00.
Bucking the downturn, smartphone IC supplier MediaTek Inc. rose 2.39 percent to end at NT$1,500.00.
Taiwanese contract electronics makers that have built production lines in Mexico also faced headwinds Monday, dealers said.
iPhone assembler Hon Hai Precision Industry Co., which rolls out AI servers in Mexico, plunged 8.06 percent to close at NT$165.60, and Quanta Computer Inc. tumbled 10 percent, the maximum daily decline, to end at NT$243.00.
In addition, Wistron Corp. lost 9.09 percent to close at NT$100.00, while Pegatron Corp. ended up 0.72 percent at NT$97.40.
"Judging from the selling of these tech heavyweights, I suspect foreign institutional investors stood on the sell side today," Huang said.
According to the Taiwan Stock Exchange, foreign institutional investors sold a net NT$74.40 billion in shares Monday, the eight largest net sell in the market's history.
With the electronics sector the target of the sell-off, non-tech stocks ended mixed.
Formosa Plastics Corp. lost 4.97 percent to close at NT$34.45, and Nan Ya Plastics Corp. shed 3.40 percent to end at NT$31.25.
On the other hand, food brand Uni-President Enterprises Corp. rose 1.02 percent to close at NT$79.20, and Wei Chuan Foods Corp. ended up 1.12 percent at NT$18.05.
In the financial sector, which lost only 0.16 percent, Mega Financial Holding Co. rose 1.16 percent to close at NT$39.15, while Fubon Financial Holding Co. fell 1.51 percent to end at NT$91.40, and Cathay Financial Holding Co. dropped 1.20 percent to end at NT$66.00.
"It's too early to judge whether the Taiex will have strong technical support around 22,605 points, the 120-day moving average," Huang said. "Investors should keep a close eye on how Trump will impose tariffs on chips."
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