Local shares fall by almost 2.5 percent

TECH LOSSES: ‘Tech stocks had gained substantially since the beginning of this year,’ so the disappointing earnings prompted investors to trim holdings, an analyst said

Shares in Taiwan plunged by just under 2.5 percent yesterday, led by major artificial intelligence (AI)-related stocks, after tech stocks on US markets saw heavy losses overnight amid growing concerns that massive AI investments would not deliver comparable returns, analysts said.

The TAIEX closed down 1,156.50 points, or 2.49 percent, at 45,211.83 on turnover of NT$877.730 billion (US$27.03 billion).

“After the latest earnings reports by major American cloud service providers, worries over AI spending came back to haunt investor sentiment,” Concord Capital Management Corp (康和投顧) analyst Lu Chin-wei (呂晉維) said.

A woman stands near an electronic stock board in Taipei.

Photo: Kelson Wang, Taipei Times

Alphabet’s disappointing sales renewed AI concerns, sending its shares plunging overnight, while Amazon.com shares also slumped on its soaring AI spending.

“Tech stocks had gained substantially since the beginning of this year, so such disappointing earnings reports simply prompted investors to trim their holdings and pocket gains,” Lu said.

After the tech-heavy NASDAQ fell 1.38 percent on Thursday, the electronics index in Taiwan fell 2.90 percent yesterday.

Contract chipmaker Taiwan Semiconductor Manufacturing Co (台積電), which accounts for more than 40 percent of total market value, lost 1.86 percent to close at NT$2,370, contributing about 360 points to the TAIEX’s decline.

Among other semiconductor stocks, smartphone integrated circuit designer MediaTek Inc (聯發科) shed 3.21 percent to close at NT$3,915, while IC packaging and testing firm ASE Technology Holding Co (日月光投控) closed down 2.20 percent at NT$668.

Application-specific IC designer Alchip Technologies (世芯) shed 6.93 percent to close at NT$3,425.

Elsewhere in the tech sector, iPhone assembler and AI server maker Hon Hai Precision Industry Co (鴻海精密) slid 1.01 percent to close at NT$245.50, while Quanta Computer Inc (廣達), another AI server supplier, was unchanged at NT$318.

Investors rushed to park their money in select safe havens, with Chunghwa Telecom Co (中華電信) up 1.27 percent to close at NT$160 and Far EasTone Telecommunications Co (遠傳電信) closing 0.88 percent higher at NT$114.

“The financial sector also appeared resilient. I suspect government-led funds stood on the buy side,” Lu said.

The financial index dropped 0.16 percent, with CTBC Financial Holding Co (中信金控) closing up 0.66 percent at NT$75.80, E. Sun Financial Holding Co (玉山金控) up 0.10 percent at NT$49.05 and Fubon Financial Holding Co (富邦金控) falling 0.31 percent to NT$161.50.

Among safe havens in the old-economy sector, food brand Uni-President Enterprises Corp (統一企業) closed up 1.52 percent at NT$80.20 and Wei Chuan Foods Corp (味全食品) rose 9.72 percent to NT$13.55.

“Turnover shrank further, indicating many investors were reluctant to buy on the dip as they feared uncertainty ahead of the mid-term elections in the United States,” Lu said. “As the TAIEX fell below the technical resistance ahead of 45,300 points, the 120-day moving average, more losses are possible.”

Foreign institutional investors sold a net NT$112.47 billion on the market yesterday, Taiwan Stock Exchange data showed.