Taiwan shares hit by AI bubble concerns

Taipei, Nov. 5 (CNA) Shares in Taiwan took a beating Wednesday, led by large cap stocks related to artificial intelligence, on heavy losses by tech stocks in the United States amid fears of an AI investment bubble, dealers said.

The Taiex, the Taiwan Stock Exchange's weighted index, ended down 399.50 points, or 1.42 percent, at 27,717.06 after moving between 27,373.05 and 27,799.09. Turnover totaled NT$589.47 billion (US$19.06 billion).

The market opened down 1.18 percent and the sell-off continued to send the Taiex to the day's low at around 9:45 a.m., triggered by a 2.04 percent fall on the tech-heavy Nasdaq index and a 4.01 percent plunge in the Philadelphia Semiconductor Index in the U.S. Tuesday.

Bargain hunting soon emerged, however, helping the broader market recoup part of its earlier losses to close above the nearest technical support ahead of the 20-day moving average of 27,653, dealers said.

"Investors simply seized on the big losses in U.S. markets as an excuse to pocket recent gains during the AI boom," Mega International Investment Services analyst Alex Huang said.

Before Wednesday, the Taiex had soared 22.06 percent since the beginning of the year, led by contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), which has surged about 40 percent.

"TSMC continues to dictate what happens on the Taiex, causing the market to trend sharply lower today," Huang said.

TSMC, which accounted for 42.95 percent of the market's capitalization as of the end of trading Wednesday, fell 2.99 percent to close at NT$1,460.00, contributing about 350 points to the Taiex's fall.

IC packaging and testing services provider ASE Technology Holding Co. also shed 1.67 percent to end at NT$235.00, while smartphone IC designer MediaTek Inc. gained 1.14 percent to close at NT$1,330.00.

"Bargain hunters found buying opportunities, rushing to pick up AI hardware device suppliers such as Hon Hai Precision Industry Co.," Huang said. "Hon Hai will hold an investor conference soon, and many investors are hoping for positive leads from the company."

Hon Hai, the iPhone assembler and AI server maker known globally as Foxconn, rose 1.23 percent to end at NT$247.00, off a low of NT$237.00, and Quanta Computer Inc., another AI server supplier, added 0.70 percent to close at NT$289.50.

Old economy stocks were largely lackluster, in line with the broader Taiex, with Formosa Plastics Corp. down 2.12 percent to end at NT$36.85 and Formosa Chemicals & Fibre Corp. down 2.28 percent to close at NT$27.80.

In addition, Shihlin Electric & Engineering Corp. lost 1.55 percent to end at NT$190.00, and Teco Electric & Machinery Co. fell 2.20 percent to close at NT$111.00.

In the financial sector, Fubon Financial Holding Co. shed 2.05 percent to end at NT$90.60, and Cathay Financial Holding Co. lost 0.77 percent to close at NT$64.10.

"Investors should watch to see whether the Taiex will remain above the 20-day moving average," Huang said.

According to the Taiwan Stock Exchange, foreign institutional investors sold a net NT$57.53 billion in shares on the market Wednesday.