Taipei: Shares in Taiwan experienced a significant drop of almost 1.4 percent on Monday but managed to recover some of the earlier losses after U.S. President Donald Trump appeared to retract a previous threat to increase tariffs on Chinese goods by 100 percent, as reported by market dealers.
According to Focus Taiwan, the Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), closed down by 378.50 points, or 1.39 percent, at 26,923.42. The index fluctuated between 26,470.44 and 26,965.72 during trading hours, with a turnover amounting to NT$583.97 billion (US$19.05 billion).
The market commenced trading with a dip of over 800 points, triggered by investor concerns following Trump’s earlier threat of imposing a “100 percent tariff” if China decided to limit rare earth exports. This announcement had previously led the Dow Jones Industrial Average and the Nasdaq to drop by 1.90 percent and 3.56 percent, respectively, on Friday.
However, trading eventually stabilized as markets reacted positively to Trump’s subsequent statement on Sunday, where he reassured, “Don’t worry about China, it will all be fine!” This shift in tone encouraged bargain hunters to acquire large-cap electronics stocks, including Taiwan Semiconductor Manufacturing Co. (TSMC), as U.S. stock futures showed signs of a potential rebound, according to Concord Securities analyst Kerry Huang.
Despite a 6.41 percent decline in its American depositary receipts on Friday, TSMC, the most heavily weighted stock on the Taiex, saw a more moderate fall of 1.74 percent, closing at NT$1,415.00 after hitting a low of NT$1,390.00. This recovery in TSMC shares contributed to the Taiex recouping about 200 points from earlier losses.
Huang noted that bargain hunting in TSMC and other tech heavyweights indicated that many investors remained optimistic about the prospect of the U.S. and China engaging in talks to address trade issues. In the semiconductor sector, smartphone IC designer MediaTek Inc. saw a decline of 2.23 percent, closing at NT$1,315.00, while United Microelectronics Corp., a smaller contract chipmaker, displayed resilience, dropping only 0.44 percent to close at NT$45.45.
In the broader tech sector, Hon Hai Precision Industry Co., an iPhone assembler and AI server maker, fell by 3.84 percent to NT$213.00, and Quanta Computer Inc., another AI server supplier, decreased by 1.17 percent to NT$294.50. In contrast, PC brand Asustek Computer Inc. defied the trend, rising by 2.95 percent to end at NT$697.00.
The announcement of the “T-Dome,” a planned comprehensive air defense system across Taiwan, spurred strong buying interest in “military concept” stocks, Huang observed. Drone developer Thunder Tiger Corp. saw a gain of 4.96 percent, closing at NT$148.00, while aircraft maintenance services provider Air Asia Co. surged by the maximum daily increase of 10 percent to NT$60.80.
Other stocks in the old economy sector moved in line with the Taiex, with Formosa Plastics Corp. losing 2.43 percent to close at NT$38.20, and Nan Ya Plastics Corp. dropping 1.64 percent to NT$41.90. In the financial sector, Fubon Financial Holding Co. shed 2.23 percent to finish at NT$87.80, and Cathay Financial Holding Co. ended the day down 1.66 percent at NT$65.30.
Huang described Monday’s losses as a technical retreat from a recent strong upturn, suggesting that even if the Taiex experiences further losses, the index might find technical support around 26,500 points.
According to the TWSE, foreign institutional investors sold a net NT$56.31 billion worth of shares on the main board on Monday.