The global tech stock sell-off spread to Taiwan's market, with TSMC (TSM.US) down more than 6%.
Smart Finance APP noticed that the share price of TSMC (TSM.US) fell by the most in three months, as Taiwan's stock market resumed trading after two days of public holiday and joined the global tech stock sell-off, as investors were disappointed with the outlook of AI.
Shares of TSMC, the largest chipmaker in Taiwan, fell as much as 6.5% in the morning, dragging the weighted Taiwan Stock Exchange index down more than 4%, close to technical sell-off. Other chip stocks such as the Sunmoon Group and MediaTek fell at least 5%.
The lacklustre performance of large US tech companies has prompted a rethink of the AI hype. The latest tech sell-off has put further pressure on TSMC. The stock has been on a record run since mid-July, but has been losing momentum as concerns about expensive valuations and the risk of a US crackdown on chip sales to China have weighed on the stock.
The TSMC stock has fallen more than 14% from its peak in Taiwan. Its fall has caused problems for the local financial market, as the stock accounts for more than a third of the Taiwan Stock Exchange index. The outflow of funds has hurt the new Taiwan dollar, which is trading near its lowest level since 2016.
The surge in interest in AI stocks earlier this year has sparked an unprecedented investment frenzy in Taiwan. The rise in share prices has led to retail investors rushing to buy ETFs and prompted local regulators to issue warnings about “herd behaviour”.
“The recent fall in TSMC may be due to profit-taking, but the narrative that AI investment momentum may be slowing down is also at play,” said Manish Bhargava, chief executive of Strait Investments Management. “The broader AI backdrop is not to be ignored.” The most pressing question is: “Has the AI rally run out of steam?”
Taiwanese markets were closed on Wednesday and Thursday for public holidays, after a 2.5trn-dollar stock market in the Philippines closed on Tuesday.