Taiwan Stock Market Plummets Amid Middle East Tensions and TSMC Outlook

Taiwan stock market suffers record single-day drop of 774 points, triggered by TSMC's revised outlook and Middle East tensions, highlighting the vulnerability of the global tech sector to geopolitical and economic factors.

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Taiwan Stock Market Plummets Amid Middle East Tensions and TSMC Outlook

Taiwan Stock Market Plummets Amid Middle East Tensions and TSMC Outlook

The Taiwan stock market suffered a record single-day drop of 774.08 points on Friday, closing at 19,527.12, a 3.81% decline. This was the largest single-day decline in the TAIEX index's history, surpassing the previous record of 696.97 points set on January 30, 2020. The market plunge was triggered by a combination of disappointing news from Taiwan Semiconductor Manufacturing Co. (TSMC) and escalating tensions in the Middle East.

TSMC, the world's largest contract chipmaker, reported its highest-ever first-quarter sales on Thursday. However, during an investor conference, TSMC CEO C.C. Wei revised downward the outlook for global semiconductor market revenues in 2024, from over 10% growth to around 10%. This, along with the Middle East tensions, caused TSMC's shares to tumble 6.7% to close at NT$750.

The broader Taipei market was also hit hard, with the TAIEX dipping below the 20,000-point mark and experiencing a midday plunge of over 1,000 points, the second-largest intraday drop in history. By industry, the electronics sector fell by 4.95% and financial stocks fell by 1.67%, while transportation, construction, and green energy stocks rose. Other major Taiwanese tech companies like Hon Hai Precision Industry, MediaTek, and Delta Electronics also closed lower.

The market decline was exacerbated by rising tensions between Israel and Iran, which stoked fears of a broader conflict in the Middle East. An apparent Israeli drone attack on Iranian targets contributed to market volatility, though oil prices pared their gains as the situation unfolded.

Why this matters: The record drop in the Taiwan stock market highlights the vulnerability of the global technology sector to geopolitical tensions and the economic outlook of key players like TSMC. As a critical supplier to the world's largest technology companies, TSMC's performance and projections have far-reaching implications for the industry and global markets.

The total transaction value on the Taiwan stock market was nearly NT$705 billion (roughly US$21.7 billion) on Friday, reflecting the significant impact of the sell-off. Analysts attribute the market's weakness to growing concerns that interest rates may remain high for longer than anticipated, putting pressure on companies to deliver strong profit growth in the face of a challenging economic environment.

Key Takeaways

  • Taiwan stock market suffered record single-day drop of 774.08 points (3.81% decline).
  • Plunge triggered by TSMC's revised semiconductor market outlook and Middle East tensions.
  • TSMC shares tumbled 6.7% after lowering 2024 semiconductor market revenue growth forecast.
  • Broader Taipei market hit hard, with TAIEX dipping below 20,000-point mark.
  • Market decline exacerbated by rising Israel-Iran tensions, impacting tech sector and global markets.