AI's Heat Leads to Massive Sell-Off: Over Half of Taiwan's Top 50 Market-Cap Stocks Hit Limit Down

Taiwan's stock market took a heavy beating on the 28th, plunging over 1,800 points in the afternoon session, with more than 60 individual stocks hitting limit down. The pressure on large-cap electronics stocks was particularly heavy, with over half of the top 50 market-cap stocks flashing limit down. These included MediaTek (2454-TW), Delta Electronics (2308-TW), United Microelectronics (2303-TW), Xinxing (3037-TW), Nan Ya (1303-TW), Nan Ya Technology (2408-TW), GigaByte (2327-TW), Hon Hai Precision (2344-TW), Global Unichip (6488-TW), Chicony Electronics (8299-TW), Powerchip Semiconductor (6770-TW), Nanya Technology (2337-TW), HannStar (2344-TW), and Hsinchu Science Park (2492-TW), among others. These stocks were heavily invested in by retail investors and active ETFs in memory and passive components, key heavyweight stocks.

During trading, TSMC (2330-TW) broke below the 2,300 NT$ mark, contributing 470 points to the decline. MediaTek and Delta Electronics both contributed significantly to the decline with 177 points and 139 points respectively. ASE Technology also fell over 8%, contributing nearly 70 points to the decline. The limit down of UMC, Nan Ya Technology, GigaByte, and Xinxing each contributed around 40 points to the decline, totaling nearly 1,000 points.

Analysts pointed out that this week's earnings reports from Amazon, Meta, and Microsoft are closely tied to Taiwan's AI concept stocks. Domestically, several heavyweight electronics manufacturers, including UMC, Xinxing, Delta Electronics, MediaTek, and Lite-On Technology, are scheduled to hold earnings calls, which are also closely linked to market movements.

Kang Hwa Securities noted that electronics stocks are still in a consolidation phase, while financial stocks are providing support to the market. Regarding the pressure on margin trading, with the Taiwan Stock Exchange Capitalization Weighted Stock Index Futures and TSMC seeing explosive trading volumes near the quarterly line, the index is expected to stabilize near the quarterly line in the short term. However, if the OTC index falls below the quarterly line, there is a risk of the quarterly line turning downward, and the market consolidation period may be prolonged. It is advised to be cautious with high P/E ratio positions.