Foreigners pull $19.4bn out of Taiwanese equities in a week

Taiwan's central bank attributed the fall to the correction in global technology shares and foreign capital outflows in a statement on 19 October. Foreign investors were cutting positions because of stretched valuations in artificial intelligence stocks and rising funding risk in the sector, the bank said. The Philadelphia Semiconductor Index fell 15.7% between 7 and 16 October while the TAIEX lost 5.4%; the bank read that gap as relative resilience. The TAIEX shed 4.47% last week alone, and the NT dollar lost 1.37%.

Selling continued on 19 October. According to Focus Taiwan, foreign investors sold a net NT$76.74bn of shares that day, about $2.37bn. The TAIEX closed 0.61% lower at 46,822.08 after falling more than 940 points intraday; the Philadelphia index had dropped 3.83% the previous Friday. TSMC alone accounts for more than 40% of market capitalisation, and the stock closed flat. An analyst at Concord Securities said he suspected state-backed funds had been buying TSMC; that claim could not be verified.

On the currency side, Cathay United Bank said the NT dollar broke the 32.5 threshold as equity selling intensified. The bank said expectations that US rates stay elevated were lifting bond yields and weighing on Asian currencies. The Fed meets on 27-28 October. The Korean won and Chinese yuan gained against the dollar in the same week while the Japanese yen slipped 0.24%; the pressure concentrated in the market with the heaviest AI weighting.