Taiwan Stocks' Black Friday Falls Below 40000 Points
Taiwan stocks staged a Black Friday on the 6th, falling for the 7th consecutive day, at one point in the session plummeting 3737.67 points, the largest intraday drop in history, and finally closing down 1873.08 points at 39701.64 points, losing the 40000-point integer level, marking the 4th-largest closing-point drop in history. The market attributed the sharp plunge to the Democratic Party's big win in the U.S. midterm elections, with worries that the AI industry will face stricter regulation ahead, triggering a global tech-stock selloff. Related concerns will still take time to digest, and the market will also closely watch the Democratic Party's subsequent policy moves.
NT Dollar Rebounds Sharply After Breaking Below 33
In contrast to the brutal slide in Taiwan stocks, the NT dollar exchange rate staged a dramatic comeback on the 6th. Dragged down by the stock market crash in early trading, the rate quickly broke below the 33 integer mark, but returned to the 32 level in the morning, and in the afternoon surged to the 32.7 level as exporters rushed in to sell foreign exchange, finally closing at 32.768, up sharply by 1.08 jiao, recovering part of the lost depreciation ground. On the same day, although foreign investors sold Taiwan stocks for the 7th straight day, the over-selling amount narrowed to within 100 billion yuan at 911.88 billion yuan, with selling pressure in stocks and foreign exchange showing signs of easing.
Expert: Only a Halt to Depreciation Can Be Hoped For
Foreign exchange expert Li Qizhan believes that Taiwan stocks left a long lower shadow, with turnover expanding to over 1.2 trillion yuan in New Taiwan dollars, counting as a forceful rebound, and with the scale of foreign investor over-selling shrinking, it can be seen as a positive signal. But for the foreign exchange market, at this stage only a halt to depreciation can be hoped for, and there is still a long way to go before a rebound. Banking sources said the central bank's rare call on the 5th for exporters not to wait any longer, plus the exchange rate having reached the sweet spot in exporters' eyes, unleashed full firepower in foreign-exchange selling, in a move that surprised everyone.
Outlook Hinges on Battle Between Foreign Investors and Exporters
However, banking sources reminded that on the 6th, foreign investors' outward remittance volume in the foreign exchange market also shrank simultaneously, and it cannot be ruled out that part of the reason was that many Taiwan stocks hit limit-down, leaving foreign investors unable to sell even if they wanted to, so selling pressure may not have dissipated. Next week it will still be necessary to watch whether foreign-investor selling pressure continues before further judging the subsequent trend. Li Qizhan pointed to 2 major indicators to watch: first, foreign investors shifting from continuous over-selling to sustained net buying, and second, a pullback in the U.S. dollar index, such as cooling U.S. inflation and weakening Federal Reserve rate-hike expectations, which would help ease depreciation pressure, but both are unlikely to be in place in the short term, and the NT dollar will hardly shake off its weak pattern in the short term.