Taiwan Stocks Search for Bottom as AI Demand Holds Firm

Taiwan’s benchmark stock index suffered a record 1,807.21-point decline on Aug. 5, 2024, prompting investors to assess whether forced selling had run its course. CTBC Investment Consulting said the near-term direction would hinge on global equities, the Taiwan dollar and heavyweight shares led by Taiwan Semiconductor Manufacturing Co. While market positioning remains fragile, the AI investment cycle and corporate earnings continue to offer medium-term support.

Foreign investors sold a cumulative NT$310.2 billion as the selloff drove the market below its quarterly moving average, while margin deleveraging amplified volatility. CTBC said investors should watch for stabilization in overseas markets, the Taiwan dollar and TSMC-led large-cap shares. TSMC on July 18 raised the lower end of its 2024 capital-spending forecast to US$30 billion from US$28 billion, while retaining a US$32 billion ceiling, signaling resilient AI-related demand.