The Taiex, the Taiwan Stock Exchange’s (TWSE) weighted index, dropped by more than 15 percent during the Year of the Tiger, with market heavyweight Taiwan Semiconductor Manufacturing Co. (TSMC) diving almost 21 percent.
On Wednesday, the last trading session of the Year of the Tiger, which began on Feb. 1 last year and will end on Jan. 21, the Taiex rose only 5.92 points, or 0.04 percent, to close at 14,932.93 points.
Analysts attributed the decline to cautious market sentiment amid possible negative leads from overseas markets during the upcoming Lunar New Year holiday. Local trading will resume on Jan. 30.
From the first session of the Year of the Tiger on Feb. 7 last year up to Wednesday, the local main board plunged 2,741.47 points, or 15.51 percent, its worst performance for 14 years.
Market capitalization on the main board during the Year of the Tiger fell NT$8.08 trillion (US$266.67 billion) compared with the preceding Year of the Ox, standing at NT$54.80 trillion as of Jan. 17.
Based on the fall in the market cap, the Taiex’s 12 million investors incurred an average of NT$670,000 in losses during the Year of the Tiger.
After the Taiex hit the historical intraday high of 18,619.61 on Jan. 5, 2022, the main board started a technical pullback.
Worse soon followed, with the main board retreating to 16,764 in early March following Russia’s launching of military operations in neighboring Ukraine on Feb. 24
A month later, an outbreak of the Omicron variant of COVID-19 in Taiwan hurt domestic economic activity and sent the Taiex even lower to 15,616.68 at the close on May 12.
The local main board continued to feel the pinch resulting from an aggressive rate hike cycle by the U.S. Federal Reserve and an escalating tech war between Washington and Beijing, sending the Taiex even lower. On July 12, the main board dipped below 14,000 points to reach an intraday low of 13,928.66.
To calm market turbulence and boost investor confidence, the National Financial Stabilization Fund began an intervention on Feb. 13.
The NT$500 billion stabilization fund was set up in 2000 by the government to serve as a buffer against unexpected external factors that could disrupt the local bourse.
Despite the stabilization fund’s intervention, a hawkish Fed continued to dictate market movements, pushing down the Taiex to 13,778.19 at the end of Sept. 26, lower than the fund’s target of Feb. 12’s intraday low.
Worse was yet to come, with the Taiex falling to 12,629.48, the intraday low of Oct. 25, the lowest level during the Year of the Tiger.
However, the local main board managed to mount a comeback in November, rising more than 2,5000 points to 15,152.38 on Dec. 1.
TSMC, the most heavily weight stock on the Taiex, closed at NT$503.00 on Jan. 17, down 0.40 percent from a session earlier.
Although TSMC ranked as the most profitable enterprise in Taiwan, its shares remained bothered by geopolitical tensions, fast-growing inflation, aggressive Fed rate increases, and concerns over industrywide inventory adjustments.
These factors prompted foreign institutional investors to cut their holdings, sending the stock into a tailspin, with its share price falling 20.91 percent during the Year of the Tiger.
During the Year of the Tiger, foreign institutional investors sold a net total of more than 1 billion TSMC shares, according to the TWSE.
TSMC’s market cap shrank by NT$3.44 trillion during the Year of the Tiger, contributing about 1,100 points to the overall drop on the Taiex.
While many foreign institutional investors stood on the sell side, the Warren Buffett-run Berkshire Hathaway reported to the U.S. Securities and Exchange Commission in November that it owned about 60.1 million TSMC American depository receipts (ADRs), valued at more than US$4.1 billion as of the end of the third quarter.
Analysts said the investment by Buffet demonstrated his long-term confidence in the world’s largest contract chipmaker, which is extending its reach overseas with wafer fabs in the United States and Japan.
In addition, C.C. Wei (???), TSMC’s CEO, also bought 467,000 shares from the open market during the October-December period as a purported show of faith in the company.
TSMC’s net profit breached the NT$1 trillion mark for the first time to hit NT$1.01 trillion in 2022, up 70.4 percent from a year earlier.
The chipmaker’s consolidated sales totaled NT$2.26 trillion, up 42.6 percent, on the back of solid demand for chips made on its advanced processes.
However, TSMC has forecast its consolidated sales for the first quarter of this year will range between US$16.7 billion and US$17.5 billion due to weakening end-user demand and continued inventory adjustments.
Based on the median figure of US$17.1 billion, TSMC’s first quarter revenue will fall about 14.2 percent from a quarter earlier.
TSMC has also anticipated its sales for the first half of this year will fall 4-9 percent from a year earlier in U.S. dollar terms.
However, the chipmaker has forecast a slight year-over-over revenue increase in 2023, outperforming the global semiconductor industry.
Source: Focus Taiwan News Channel