Taiwan market crashes over 1,000 points as major firms dump nearly NT$100 billion.

Taiwan’s stock market was subjected to an unprecedented shock today, with the Weighted Index experiencing a precipitous plunge both during intraday trading and at the close. The index tumbled by 1,156.5 points, breaking through multiple critical support levels to close at 45,211.83 points. This severe market crash was accompanied by extreme panic, as total trading volume surged to a massive 877.73 billion New Taiwan dollars. This record-breaking turnover indicated that, during the sharp decline, the market was flooded with massive panic-driven stop-loss selling and intense battles between bulls and bears. Faced with such violent volatility, investors were left shaken, closely monitoring subsequent capital flows and market developments.

Behind this historic crash, the primary driver of the relentless selling was undoubtedly the dramatic shift in institutional investor activity. According to the latest position data released by the securities exchange, the three major categories of institutional investors in the Taiwan stock market—the Foreign Sector, the Local Securities Firms, and the Local Mutual Funds—collectively net sold a staggering 139.844 billion New Taiwan dollars today. Among them, the Foreign Sector, which includes both foreign and mainland Chinese investors and serves as the primary source of foreign capital momentum in the Taiwan market, acted without restraint, becoming the main force behind today’s dumping as they aggressively adjusted their holdings. Meanwhile, the Local Securities Firms, whose moves often influence market sentiment, also stood on the selling side, simultaneously executing large-scale position reductions and risk-aversion operations. Under the immense pressure of these two groups jointly withdrawing funds and frantically selling shares, only the Local Mutual Funds bucked the trend by standing on the buying side, attempting to exert the stabilizing power of domestic capital. However, compared to the overwhelming selling pressure from the Foreign Sector and Local Securities Firms, the buying strength of the mutual funds was negligible and fundamentally unable to reverse the market’s one-sided decline.

To deeply analyze the domino effect triggered by today’s institutional flows, it is necessary to look back at the macroeconomic backdrop of the global financial markets in recent times. Frequent shifts in domestic and international political and economic variables have intensified volatility in global equity markets. In particular, the direction of the U.S. Federal Reserve’s monetary policy, the stickiness of global inflation data, and the uncertainty of geopolitical risks have continuously triggered the sensitive risk nerves of foreign institutional investors. As a highly export-oriented economy, the performance of the Taiwan Weighted Index is closely linked to the inflow and outflow of foreign capital. When the international financial environment shows signs of turbulence, or when foreign investors face pressure to redeem funds in their home markets, the Taiwan market is often the first to be hit, becoming the preferred source for foreign capital adjustments. Today’s aggressive net selling by both the Foreign Sector and Local Securities Firms is a concrete manifestation of this large-scale international capital reallocation and the rapid escalation of risk awareness.

In contrast to the comprehensive retreat of the Foreign Sector and Local Securities Firms, the counter-trend buying by Local Mutual Funds today reflects different operational logic and capital characteristics among domestic institutional investors. Mutual fund assets are largely linked to the systematic investment plans and discretionary investment funds of a broad base of domestic retail investors and retirement funds, which possess relative long-term stability. When facing sudden market crashes, fund managers often bear the responsibility of buying the dip, maintaining fund net asset values, and stabilizing market confidence. Therefore, even as the market teetered on the brink, mutual funds engaged in targeted buying and absorption in certain heavyweight stocks and industry sectors that have fundamental support, dividend yield protection, or clear long-term industrial trends. However, judging by today’s massive trading volume of over 80 billion New Taiwan dollars and the drop of more than 1,000 points, the absorption capacity of retail and domestic capital was clearly insufficient to digest the massive volume of shares dumped by foreign investors.

Looking ahead, this super earthquake, triggered by the combined net selling of nearly 140 billion New Taiwan dollars by the three major institutional groups, has dealt a blow to the Taiwan market that goes beyond mere point losses; it has severely dented investor confidence and disrupted the positioning landscape. In the short term, such massive trading volume and sharp declines indicate that the market has experienced intense battles between bulls and bears and significant turnover in shares. Many investors who bought on margin may face the pressure of margin calls or forced liquidation, which will plant the seeds for further volatility in the coming trading days. Investors facing the current unpredictable market conditions must closely monitor signals of a bottom in international stock markets, changes in foreign investor positions in the futures and cash markets, and the extent of margin balance cleanup. Only after positions have settled and panic sentiment gradually fades will the Taiwan market have the opportunity to seek a bottom and stabilize amid the intense turbulence.

(Source: Central News Agency)