Taipei: Shares in Taiwan closed lower on Tuesday as investors capitalized on the high valuations of artificial intelligence-related stocks, leading to a sell-off that drove the market down. The Taiex, the weighted index on the Taiwan Stock Exchange, fell 218.03 points, or 0.77 percent, closing at 28,116.56, fluctuating between 28,033.62 and 28,554.61 throughout the day. Turnover was substantial, totaling NT$584.89 billion (US$18.92 billion).
According to Focus Taiwan, the market initially climbed during the early morning session, buoyed by continued buying in the electronics sector following a tech rally in the U.S. The rally was partly fueled by a significant deal between OpenAI and Amazon, valued at US$38 billion, allowing ChatGPT to operate its AI systems on Amazon's data centers. However, the initial gains were offset by profit-taking in AI stocks, which dragged the Taiex into negative territory. Dealers noted a wide high-to-low range of about 520 points amid fears of further losses.
Concord Securities analyst Kerry Huang commented on the situation, highlighting that the main board had experienced profit-taking in recent sessions, with volatility becoming more pronounced due to high valuations in AI stocks. Huang remarked that despite deals like the Amazon-OpenAI agreement, some investors were waiting for tangible revenue figures following large-scale AI infrastructure investments.
Among the AI stocks that suffered losses, Hon Hai Precision Industry Co., a key iPhone assembler and AI server maker, dropped 2.98 percent to close at NT$244.00. Quanta Computer Inc., another AI server supplier, fell by 3.36 percent to end at NT$287.50. Graphics card provider Giga-Byte Technology Co. and AI power solutions manufacturer LITE-ON Technology Corp. saw declines of 3.61 percent and 5.56 percent, closing at NT$267.00 and NT$170.00, respectively.
Despite the overall downturn, some losses on the Taiex were mitigated by last-minute buying in Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock, which slipped only 0.33 percent to NT$1,505.00. In contrast, smartphone IC designer MediaTek Inc. bucked the trend, rising 1.15 percent to NT$1,315.00.
Huang noted that while large-cap tech stocks continued to drive the Taiex, traditional sectors like steel and shipping were largely overlooked. China Steel Corp. and Tung Ho Steel Corp. fell 1.09 percent and 1.92 percent, respectively, while container shippers Evergreen Marine Corp. and Yang Ming Marine Transport Corp. saw declines of 2.59 percent and 2.30 percent.
In contrast, the financial sector experienced a 0.52 percent rise due to rotational buying. Fubon Financial Holding Co. increased by 0.54 percent to NT$92.50, and Cathay Financial Holding Co. gained 1.10 percent, ending at NT$64.80.
Looking ahead, Huang expressed caution regarding the market's trajectory, citing foreign institutional investors' recent sales. According to the TWSE, these investors sold a net NT$7.63 billion on the main board on Tuesday, following a net sell of NT$8.45 billion on Monday, potentially posing technical challenges for the Taiex as it approaches the 28,400-28,500 range.