The Taiwan stock market experienced its largest single-day drop in history on Friday, July 17, with the weighted index plummeting 2,953.71 points, or 6.47%, to close at 42,671.27 points. The crash saw the market lose several key support levels, including the 45K, 44K, and 43K marks, and resulted in the index falling below its quarterly line.
Semiconductor Forecasts and External Pressures
The plunge was heavily driven by the semiconductor sector. TSMC shares dropped 7.2% to 2,290 TWD, despite reporting strong second-quarter results with a tax-after profit of 706.5 billion TWD and an earnings per share (EPS) of 27.25 TWD. According to reports, the sell-off was triggered by a third-quarter gross margin forecast that was lower than market expectations due to overseas expansion costs and 2nm mass production.
TSMC President C.C. Wei further impacted sentiment by stating that only mature processes related to AI are currently tight, which countered expectations of a general shortage. Additionally, the market was dragged down by a 4.29% drop in the Philadelphia Semiconductor Index on Thursday, July 16, and high-leverage trading triggers in the South Korean market, according to CTBC Securities Investment Consulting.
Market Outlook and Reactions
CTBC Securities Investment Consulting warned that the market could further test the 42,000-point level due to high financing balances and continued selling by foreign investors. They identified three key signals for a market bottom: stabilization of international markets like the Philadelphia Semiconductor Index, a recovery of the New Taiwan Dollar, and the stabilization of heavyweight stocks such as TSMC and MediaTek.
Despite the crash, some experts expressed optimism. Financial expert Ruan Muhua stated he does not believe there is a crisis shifting the market into a bear trend and revealed he has invested eight-figure sums into various stocks and ETFs, including TSMC. Similarly, broadcaster Liu Han-chu noted she purchased TSMC shares before the close on Friday.
Following the historic drop, the Taiwan Index futures night session on July 18 showed a rebound, rising 877 points (2.06%) to 43,481 points, with TSMC futures also increasing by 45 points.
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