Taiwanese stocks rose Monday following the government's move to tighten short-selling limits and activate the market stabilization fund last week to stem the rout in artificial-intelligence shares.
Taiwan's benchmark Taiex was recently up 6.1%, on track for its largest daily percentage gain since late July, with semiconductor-related stocks rebounding broadly. Shares of Taiwan Semiconductor Manufacturing Co., the world's largest contract chip maker, rose 6.6%, Foxconn Technology jumped 8.5%, and MediaTek advanced 9.9%.
The Taiex tumbled more than 12% last week, recording its largest weekly loss since the week of 9/11 in 2001, after Democrats' sweeping win in the U.S. midterm elections sparked concerns about a slowdown in data-center buildout.
At an emergency meeting on Friday afternoon, Taiwan's National Financial Stabilization Fund authorized its executive secretary to deploy funds as needed to stabilize the market.
Foreign institutional investors sold a net 524.4 billion New Taiwan dollars, equivalent to US$16.0 billion, in equities last week after dumping US$30.33 billion of stocks in October, a record high for a single month, according to the stabilization fund.
"While the announcement should boost sentiment and investor confidence, actual deployment may be more limited," analysts at Goldman Sachs said in a note. They think high-quality, inexpensive index heavyweights are likely to be the primary targets for purchases.
It is too early to say whether the current market turbulence in global markets marks the start of an AI investment slowdown, analysts at Capital Economics said in a note. However, if it does, exports from tech-heavy economies like Taiwan will decelerate and their chipmakers could scale back their own investment plans, they added.
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