U.S. Market Rout Drags Taiwan Stocks Below Annual Line
Hit by AI policy concerns after the U.S. midterm elections, Taiwan stocks plunged more than 3,700 points in early trading on the 6th,Breaking below the 38,000-point mark and falling under the annual moving average, with losses narrowing after intraday selling pressure was digested and turnover estimated at NT$1 trillion. The main cause was calls by some Democratic lawmakers and governors after the election to restrict AI and data center expansion, which heated up market concerns, triggering broad selling in U.S. stocks on the 5th. The Dow Jones Industrial Average fell 1,833.06 points, or 3.44%, to close at 51,523; the S&P 500 fell 334.89 points, or 4.36%, to close at 7,354; the Nasdaq fell 1,421.51 points, or 5.52%, to close at 24,315; the Philadelphia Semiconductor Index fell 1,257.51 points, or 12.25%, to close at 9,011. The fear index VIX surged 69.72% to 28.19. Taiwan semiconductor ADRs tumbled in tandem, with TSMC ADR falling 10.78% to close at US$353.10, UMC ADR falling 16.69% to close at US$13.38, and ASE ADR falling 20.77% to close at US$29.72. Asian markets were also affected, with Korean stocks plunging more than 8% at the open and triggering the circuit breaker mechanism. Taiwan stock index futures in the night session fell 2,946 points, or 7.03%, to 38,936 points,Breaking below the 40,000-point mark.
Heavyweight Duo Opens After Hitting Limit-Down
Heavyweight stocks were the hardest hit in early trading, with TSMC (2330) and MediaTek (2454) both unusually hitting limit-down, while Delta Electronics (2308) also plunged to lock at NT$1,020 at limit-down. The top ten high-priced stocks all weakened at one point, with top stock ASPEED (5274) gapping down to lock at the NT$11,375 limit-down price, and indicator stocks such as King Slide (2059), Global Unichip (3443), Jentech (3653), Largan (3008), EMC (2383), and WinWay (6233) all hanging at limit-down intraday. As intraday selling pressure was digested, TSMC and MediaTek successfully opened from limit-down, with TSMC shares rebounding to NT$2,165 and MediaTek recovering to NT$3,340, driving the index to narrow its decline.
Funds Shift to Defensive Groups Showing Resilience
As technology stocks tumbled, some safe-haven funds shifted to domestic demand and defensive groups. Ten Ren (1233) surged to hit the daily limit in early trading. Cybersecurity themes attracted buying interest, with Liscense (5202), Guanghuan Technology (3287), Smart Link Services (6751) and Tongheng (5490) bucking the trend to hit the daily limit. Driven by U.S. manufacturing and green energy themes, United Renewable Energy (3576) rose 3% against the trend, while TSEC (6443) turned from limit-down to positive, becoming one of the few resilient highlights on the market.
Institutions Focus on Five Stabilization Signals
Shen Jianhong, manager of the Taishin Taiwan SME Active ETF Fund (00416A), said that after the U.S. midterm elections ended in a major Democratic victory, the market worried that AI infrastructure would be affected, with comprehensive selling pressure in U.S. stocks on the 5th and technology and semiconductor stocks the hardest hit. In the long term, the AI trend has not changed, and the market estimates that Taiwan corporate earnings momentum will be strong from 2026 to 2027, with double-digit growth in both years, and a healthy technical pullback will help stabilize chips, so there is no need to be pessimistic in the long term and sharp drops can be used to buy Taiwan active ETFs in batches at low levels. From upstream wafers to midstream packaging and testing and PCB, to downstream components and ODM, visibility across the entire supply chain is lengthening, specification upgrades are driving demand, and corporate earnings remain on an upward revision trend. Capital Investment Advisory noted that Taiwan stocks fell for six consecutive sessions to rewrite the recent low, with a weak short-term technical outlook and expectations of further testing ahead. Analyst Guo Weizheng believes that whether foreign investors will reverse their short covering depends on five signals: convergence of foreign spot selling pressure turning to consecutive net buying, stabilization and rebound of the New Taiwan dollar, decline in foreign net short positions in Taiwan index futures, U.S. tech giants' earnings confirming AI investment translating into revenue and cash flow, and cooling of the U.S. dollar, U.S. Treasury yields and hedging sentiment. Stocks and funds mentioned are for reference only and are not investment advice.