U.S. plunge drags Taiwan stocks below annual line
After the U.S. midterm election results were announced, markets worried artificial intelligence regulation will further tighten and data center construction will face greater resistance, U.S. four major indexes fell sharply in sync. Affected by this, Taiwan stocks collapsed over 3,700 points in early trading today on the 6th, falling below the annual line, once dropping to 37,837.05 points, setting the largest intraday point drop in history. The intraday decline once approached 4,000 points, and as of 10:55 a.m., the decline narrowed to over 1,000 points, with markets watching when it will stabilize.
TSMC hits limit-down, electronics and financials plunge
Weighted leader TSMC hit limit-down at NT$2020 after opening, then narrowed its decline, consolidating down over 2% at NT$2185. Including Asia Vital Components, Jentech, Honge, ITEQ, WinWay, Advantech Electronics and other electronics stocks gapped down to limit-down at the open, and as of 10:55 a.m. remained locked. Financial stocks also plunged over 5%, especially life-insurance groups with heavy losses, securities-type financial holdings also fell sharply, Fubon Financial, Cathay Financial, CTBC Financial, Yuanta Financial all hit limit-down intraday, Taishin Shin Kong Financial also fell over 6%, bottoming at NT$36.3. Only biotechnology and medical stocks bucked the trend higher.
Margin-call selling pressure remains, may extend into next week
Chifa Investment Advisory analyst Ting Yen-chun said in an interview this morning that Taiwan stocks may continue to fall next week, mainly because many stocks remain locked limit-down, and selling pressure is expected to continue to be released next week. In particular, stocks with maintenance margin ratios below 130% are facing margin calls and forced-liquidation pressure, and if limit-down orders cannot be executed that day, selling pressure will be deferred to the next trading day, and with margin-call selling pressure still present, a short-term bottom will not be easy.
Fundamental noise emerges, holding cash advised
Ting Yen-chun pointed out that fundamental noise has emerged, with AI regulatory concerns and capacity-expansion price-cutting pressures heating up, and at this stage recommends holding cash, cutting high-leverage positions, and reviewing price-to-earnings ratios to reduce overvalued electronics stocks. On financials, benefiting from the U.S.-Taiwan interest-rate spread and rate-hike cycle, bank-led financial groups are relatively resilient, while securities and life-insurance-type financial holdings may be hit harder, and defensive high-dividend telecom and traditional stocks such as Chunghwa Telecom saw relatively narrower declines.