Taiwan's benchmark Taiex lost 1,655.96 points, or 3.41%, to close at 46,969.87, its sixth-largest one-day point decline, as stronger-than-expected US inflation figures revived fears of a Federal Reserve rate hike, Focus Taiwan reported on October 15. Chipmaker Taiwan Semiconductor Manufacturing Co. (TWSE: 2330) was among the heavyweights pulling the market down.
The sell-off struck a market dominated by technology and AI-linked companies. TSMC alone makes up more than 40% of total market value, and local dealers said high tech valuations amplified the impact of the inflation surprise. US data released on October 14 showed consumer prices rose 3.7% in September, above the 3.6% the market had expected.
Turnover jumped to TWD1.32tn ($40.98bn) from TWD978.14bn the previous session, with the index trading between 46,795.38 and 48,382.75.
"Look at the expanded turnover. I think investors scrambled to trim their holdings in panic," said Kevin Su, an analyst at Hua Nan Securities cited by Focus Taiwan. "They were disappointed with the US September inflation data, raising concerns over a hawkish Fed."
"Rising interest rates will raise fundraising costs for AI companies," Su said. "At a time of high valuations of tech stocks, such negative leads were amplified, sending their stock prices into a tailspin."
Su added that declines in chip stocks in Tokyo and Seoul put further pressure on Taipei.
TSMC fell 2.01% to TWD2,440 after its American depositary receipts dropped 3.40%, and the electronics index slid 3.84%. ASE Technology Holding Co. (ASX) plunged by the daily limit of 10%, while MediaTek Inc. (TPE: 2454) lost 6.93% and Delta Electronics Inc. dropped 8.68%. Hon Hai Precision Industry Co. ended 1.44% lower.
Foreign institutional investors were net sellers of TWD302.56bn of shares on the main board, according to the Taiwan Stock Exchange.
Meanwhile money flowed into defensive names. Telecom operators Chunghwa Telecom Co., Taiwan Mobile Co. and Far EasTone Telecommunications Co. gained between 2.69% and 4.63%, and the financial sector rose 0.73%.