Taiwan Stocks Plunge as US-China Trade Tensions Escalate: A Market in Turmoil

Tariff Wars Trigger Panic Selling, Leaving Investors and Key Stocks Bleeding

Taipei, Taiwan – The Taiwan stock market experienced a sharp downturn for the third consecutive trading session on Wednesday, reflecting the escalating trade tensions between the United States and China. The market witnessed a significant drop, triggered by the imposition of additional tariffs by the US.

The Taiex, the benchmark index of the Taiwan Stock Exchange (TWSE), plummeted by 1,068.19 points, or 5.79%, closing at 17391.76. This followed a trading range that saw the index fluctuate between 17306.97 and 18,371.52. Turnover reached NT$566.61 billion (US$17.14 billion), highlighting the intense market activity.

The day's decline was notably severe, ranking as the third-steepest drop in the market's history, following the recent days. Despite the intervention of the NT$500 billion National Financial Stabilization Fund, established to cushion the market from external shocks, the selling pressure remained intense.

MasterLink Securities analyst Tom Tang commented on the market's reaction, stating that the expanded turnover indicated heavy selling, as investors reacted to the US tariff announcement and the lack of any backing down from China.

Tang also pointed out that the global economic concerns fueled by the trade war were significant, with investors fearing substantial financial losses due to the conflict between the world's two largest economies. The presence of the stabilization fund did little to alleviate the sell-off.

“I suspect the stabilization fund and other government-led funds rushed to pick up market heavyweights, including TSMC (Taiwan Semiconductor Manufacturing Co.) to prevent the index from falling even further,” Tang said.

TSMC, a crucial player in the market, saw its shares fall by 3.80%, closing at NT$785.00, marking the first time it fell below the NT$800 mark since May 9, 2024.

"TSMC shares are cheap now but the stock remains haunted by tariff worries and it is hard to predict when it will bottom out," Tang said.

According to Tang, government-led funds were also observed purchasing semiconductor stocks, including MediaTek Inc., which experienced a 5.95% loss, closing at NT$1,185.00. However, other semiconductor companies, such as Nanya Technology Corp. and other testing services providers, saw their shares plummet 10%, the maximum daily decline, closing at NT$30.20 and NT$115.00, respectively.

Hon Hai Precision Industry Co., a major iPhone assembler and AI maker, experienced a 10% plunge, closing at NT$112.50. This marks the third consecutive session of maximum decline.

"Hon Hai has a broad production base in China so many investors fear the company will be hit hard by the escalating tariff war," Tang said.

Tang noted that some non-tech stocks also benefited from government support, with Uni-President Enterprises Corp. decreasing by 4.21% to close at NT$75.00, and China Steel Corp. shedding 7.09% to end at NT$19.00.

In the old economy sector, Formosa Plastics Corp. fell 9.70% to close at NT$31.65, and Nan Ya Plastics Corp. dropped 6.93% to end at NT$26.85.

The financial sector also felt the impact, with CTBC Financial Holding Co. decreasing by 5.16% to close at NT$34.00, and Mega Financial Holding Co. ending down 3.66% at NT$36.85. Furthermore, Fubon Financial Holding Co. declined 7.45% to close at NT$72.10, and Cathay Financial Holding Co. shed 8.50% to end at NT$49.50.

“Due to the steep decline in recent sessions, many investors have faced margin calls (to add money to their margin accounts) to trigger more selling,” Tang said. “I think the market is far from stable so stay cautious.”

According to the TWSE, foreign institutional investors reported a net sale of NT$35.78 billion worth of shares on the main board.