Taiwan's stock market ended the day on a positive note, but it wasn't all smooth sailing. The real drama unfolded as investors braced for MSCI's index adjustments, which sent ripples through the market. Here’s the full story.
On Monday, Taiwan's shares closed slightly higher, but the gains were modest compared to the day's highs. Dealers pointed to last-minute selling pressure on large-cap tech stocks ahead of MSCI Inc.'s regular index adjustments, which took effect after the market closed. The Taiex, Taiwan's weighted index, rose by 69.3 points, or 0.26 percent, to close at 26,504.24. This came after a volatile session that saw the index fluctuate between 26,482.33 and 26,764.13, with a total turnover of NT$713.01 billion (US$22.67 billion).
The day started on a strong note, with the market opening 0.61 percent higher. Momentum surged in the early morning session, pushing the Taiex up by 330 points. This rebound followed Friday's sharp 3.61 percent decline, which was partially offset by New York Federal Reserve President John Williams' hint at a potential rate cut in December. But here's where it gets interesting: despite the initial optimism, selling pressure intensified in the late session, particularly among heavyweight stocks, tempering the overall upturn.
Moore Securities Investment Consulting analyst Adam Lin shed light on the situation: 'Investors were cautious ahead of the index adjustments, and the early gains provided an opportunity for profit-taking.' And this is the part most people miss: while MSCI announced on November 6 that it would increase Taiwan's weighting in one of its major indexes, Taiwan Semiconductor Manufacturing Co. (TSMC) faced the steepest cut of 0.51 percentage points in the MSCI Taiwan Index. TSMC, the market's most heavily weighted stock, fell 0.72 percent to close at NT$1,375.00, after reaching a high of NT$1,405.00. This decline alone cost the Taiex 240 points.
Here’s where it gets controversial: Lin attributed TSMC's struggles to lingering concerns about an 'AI bubble,' as Nvidia Corp. shares remained in consolidation. 'Taiwan's AI stocks, like TSMC, faced significant pressure,' he explained. However, not all tech stocks were in the red. United Microelectronics Corp., a smaller contract chipmaker, rose 3.44 percent to NT$46.55, while memory chip supplier Nanya Technology Corp. gained 2.14 percent to NT$143.00. Smartphone IC designer MediaTek Inc. also edged up 0.44 percent to NT$1,150.00.
Among other AI-related stocks, Hon Hai Precision Industry Co., an AI server maker and iPhone assembler, dropped 2.22 percent to NT$220.00. In contrast, Quanta Computer Inc., another AI server supplier, rose 0.74 percent to NT$272.00. Lin noted that 'bargain hunters shifted their focus to non-tech stocks, but the trading volume wasn’t substantial enough to provide meaningful support to the Taiex.'
Non-tech sectors saw some gains, with Eclat Textile Co. rising 4.05 percent to NT$436.50, and Makalot Industrial Co. gaining 2.83 percent to NT$309.50. Formosa Plastics Corp. added 1.25 percent to close at NT$40.50, while Nan Ya Plastics Corp. climbed 4.38 percent to NT$54.80. In the financial sector, Fubon Financial Holding Co. rose 3.72 percent to NT$90.20, and Cathay Financial Holding Co. ended up 2.99 percent at NT$65.50.
A key point to consider: Lin highlighted the role of foreign institutional investors, who have been net sellers recently. According to the Taiwan Stock Exchange (TWSE), these investors sold a net NT$29.96 billion worth of shares on the main board Monday.
So, what does this all mean for Taiwan's market? While the day ended on a positive note, the underlying currents of index adjustments, tech stock volatility, and foreign investor sentiment suggest that the road ahead may be bumpy. What’s your take? Do you think Taiwan's market can weather these challenges, or are there bigger storms on the horizon? Let us know in the comments!
