Taiex returns to 40,000 points, but AI spending concerns remain

Taipei, July 29 (CNA) Shares in Taiwan recovered to the 40,000-point level by the close of trading Wednesday on late bargain hunting but still posted a decline of more than 1,500 points as concerns over heavy spending on AI weighed on investor sentiment, dealers said.

The Taiex, the Taiwan Stock Exchange's benchmark index, closed down 1,564.18 points, or 3.76 percent, at 40,039.18, after falling to an intraday low of 39,384.85, marking the seventh-largest single-session point drop in its history.

Turnover totaled NT$1.08 trillion (US$33.46 billion).

"Like the U.S. markets, the Taiex and other tech-heavy regional markets, particularly the Seoul market, came under further pressure as investors rushed to lock in recent significant gains driven by the AI frenzy," Moore Securities Investment Consulting analyst Adam Lin said.

"Now market sentiment has shifted amid worries over massive AI spending, as investors fear those investments will fail to deliver adequate returns," Lin said. "At a time of high valuations, investors have become sensitive to any negative leads."

As the bellwether electronics sector led the Taiex lower, contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), which accounts for more than 40 percent of total market value, fell 3.51 percent to close at NT$2,200.00, contributing about 640 points to the Taiex's decline.

Smartphone IC designer MediaTek Inc. lost 4.98 percent, ending at NT$3,150.00. Meanwhile, following losses by South Korean memory chip suppliers, Nanya Technology Corp. tumbled 10 percent, the maximum daily decline, to close at NT$353.50, while Winbond Electronics Corp. also plunged 10 percent to NT$130.00.

Bargain hunters focused on select tech stocks, with iPhone assembler and AI server maker Hon Hai Precision Industry Co. proving resilient, down only 0.42 percent at NT$237.00 after hitting an intraday low of NT$231.00. Quanta Computer Inc., another AI server supplier, ended down 1.28 percent at NT$309.50 after falling to NT$301.50.

Defying the downturn, PC brand Asustek Computer Inc. rose 3.54 percent to close at NT$761.00.

Non-tech stocks also came under pressure, with Formosa Plastics Corp. falling 2.26 percent to NT$56.20, and Nan Ya Plastics Corp., the parent of Nanya Technology, sliding 10 percent to close at NT$141.50.

However, investors moved funds into select safe havens, particularly in the retail sector, Lin said. President Chain Store Corp., which operates 7-Eleven convenience stores in Taiwan, rose 1.47 percent to NT$241.00, while Far Eastern Department Stores Ltd. gained 0.22 percent to close at NT$22.35.

In the financial sector, Fubon Financial Holding Co. fell 1.99 percent to end at NT$123.00 and Cathay Financial Holding Co. lost 1.36 percent to close at NT$94.10, while E. Sun Financial Holding Co. rose 0.69 percent to NT$36.50.

"When the Taiex rebounds depends on when the South Korean market stops falling," Lin said. "Investors should also keep a close eye on any signals the U.S. Federal Reserve gives after concluding its policymaking meeting later today."

According to the Taiwan Stock Exchange, foreign institutional investors sold a net NT$22.25 billion worth of shares on the main board Wednesday.