Taipei:Shares in Taiwan experienced a notable decline of nearly 2.5 percent on Friday, driven by significant losses in major AI-related stocks. This decline followed heavy losses in tech stocks on American markets, sparked by increasing concerns that substantial AI investments might not yield proportional returns.
According to Focus Taiwan, the Taiex, which serves as the benchmark index for the Taiwan Stock Exchange, closed the day down by 1,156.50 points, or 2.49 percent, settling at 45,211.83. Throughout the day, the index fluctuated between 44,726.26 and 46,139.79, with a total turnover of NT$877.73 billion (approximately US$26.96 billion).
The latest earnings reports from major American cloud service providers have reignited worries surrounding AI spending, causing a notable impact on investor sentiment. Alphabet's disappointing sales figures heightened AI concerns, resulting in a sharp drop in its share price overnight, while Amazon's shares also fell due to its escalating AI expenditures. Concord Capital Management analyst Lu Chin-wei noted that the tech stocks had seen significant gains since the start of the year, and the disappointing earnings reports led investors to reduce their holdings and secure profits.
Following a 1.38 percent decline in the tech-heavy Nasdaq index on Thursday, Taiwan's electronics index fell by 2.90 percent on Friday. Taiwan Semiconductor Manufacturing Co. (TSMC), a contract chipmaker accounting for over 40 percent of the total market value, lost 1.86 percent, closing at NT$2,370.00, contributing approximately 360 points to the Taiex's decline. Other semiconductor stocks also experienced declines, with MediaTek Inc. dropping 3.21 percent, ASE Technology Holding Co. falling 2.20 percent, and AIchip Technologies Inc. losing 6.93 percent.
In the broader tech sector, Hon Hai Precision Industry Co. decreased by 1.01 percent, while Quanta Computer Inc. remained unchanged. PC brands Acer Inc. and Asustek Computer Inc. saw declines of 5.00 percent and 4.63 percent, respectively. Investors moved towards safe havens, with Chunghwa Telecom Co. and Far EasTone Telecommunications Co. witnessing slight gains.
The financial sector showed resilience, with government-led funds suspected to be active on the buy side. The financial index dipped only by 0.16 percent, with CTBC Financial Holding Co. and E. Sun Financial Holding Co. experiencing minor increases, though Fubon Financial Holding Co. closed slightly down.
In the old economy sector, food brands such as Uni-President Enterprises Corp. and Wei Chuan Foods saw gains, with the latter soaring 10 percent. Market turnover shrank further, indicating investor hesitation to buy on the dip due to uncertainties ahead of the U.S. mid-term elections. The Taiex fell below its 120-day moving average resistance, signaling the potential for further losses.
Foreign institutional investors sold a net NT$112.47 billion in shares on the market on Friday, as reported by the Taiwan Stock Exchange.