Taiwan stocks tumble, but former economic affairs minister sees further upside

Taiwan’s stock market has suffered sharp losses in July, but former Economic Affairs Minister Wang Mei-hua and a DBS strategist remain bullish on its longer-term outlook.

A market under pressure

The Taiwan Stock Exchange Capitalization Weighted Stock Index, or TAIEX, has recently been buffeted by global and economic concerns after a strong technology-led rally.

The selloff intensified on July 17, when the TAIEX plunged 2,953.71 points, or 6.47%, in a single session, its largest one-day point decline on record.

According to Yahoo Finance, the retreat was compounded by concerns over geopolitical tensions and sharp losses in US and Japanese markets, along with growing concerns over whether massive spending on AI infrastructure will generate comparable returns.

On Wednesday (July 29), the TAIEX fell another 1,564.18 points, or 3.76%, to close at 40,039.18 after briefly dropping below the 40,000-point mark, hitting an intraday low of 39,384.85 points. Major tech stocks, including TSMC, Foxconn, MediaTek, Quanta Computer, and Delta Electronics all fell.

The previous day, Tuesday (July 28), the TAIEX fell 2,030.83 points, or 4.65%, to 41,603.36. The July 29 loss was the seventh-largest single-session point decline in TAIEX history, while the July 28 drop was the third-largest.

Taiwan’s tech exposure in focus

The selloff was particularly severe among market heavyweights.

TSMC shares fell 3.51% on July 29, while MediaTek and Delta Electronics each lost roughly 5%.

Memory chip and other semiconductor-related stocks were also battered. Around 115 listed and over-the-counter stocks hit their daily limit-down on July 29.

According to United Daily News (UDN), the market had become caught in a pattern in which positive news failed to lift prices while negative developments triggered further selling.

Investors are also concerned that large-cap US technology companies may be overspending on AI, eroding free cash flow, while Chinese developers could follow DeepSeek’s example by producing lower-cost AI models that approach the performance of systems from US firms such as OpenAI and Anthropic.

Long-term outlook remains bullish

Former Economic Affairs Minister Wang Mei-hua (王美花) said at a lecture in Taipei on July 25 that the recent selloff was driven by several factors, including a correction linked to excessive leverage in South Korea’s stock market. She also cited the release of Chinese startup Moonshot AI’s Kimi open-weight AI model, which raised questions about the prospects of US AI firms such as OpenAI and Anthropic.

Wang told TCN that such developments would not fundamentally undermine Taiwan’s economic outlook. Taiwan, she said, is essentially “selling the shovels” in the AI era, supplying the tools and infrastructure used by major technology companies such as Nvidia, Google and AMD.

The GPUs and TPUs underpinning those companies' AI systems, she noted, are not directly threatened by the rise of open-source AI models. She argued that broader AI use could increase demand for the underlying computing infrastructure.

Wang therefore urged investors not to overreact to short-term market declines, which she described as part of normal market fluctuations, and said she maintained a bullish view of Taiwan’s longer-term prospects.

She pointed to the rise in the number of Taiwan-listed stocks trading above NT$1,000 (approximately US$30.84) per share — from just 4 in 2022 to 16 in 2024, 27 last year and 52 today.

One stock had surpassed NT$10,000, while several others traded above NT$5,000. Wang noted that a stock exceeding NT$100 once seemed remarkable, while daily moves of several hundred New Taiwan dollars have become more common among high-priced shares.

Wang said Taiwan’s broader economic fundamentals also remain robust. 

Taiwan’s monthly exports reached a record US$80.18 billion in March 2026, buoyed by the AI and technology boom, while imports hit a then-record US$58.91 billion, leaving a trade surplus of US$21.27 billion.

Wang added that despite its relatively small size, Taiwan was the United States’ third-largest source of goods imports in the first four months of 2026, behind only Mexico and Canada, and ahead of China, Japan and South Korea.

She said AI could support drug discovery and pharmaceutical development, while companies across Taiwan’s established manufacturing base, from optics and linear rails to diving suits, toothpaste and tennis rackets, could find new opportunities as AI reshapes industries across the economy.

Yeang Cheng-ling (楊政齡), chief investment officer for North Asia at DBS, said at a DBS event held July 22 that global technology stocks had continued their long-term ascent after previous market shocks, including the COVID-19 pandemic, the Federal Reserve’s 500-basis-point rate-hiking cycle, the Trump administration’s “Liberation Day” tariffs and the US-Iran war.

For investors, Yeang said, “time in the market” ultimately matters more than “timing the market.” Given the sustained trajectory of AI capital expenditure, Yeang said he remained bullish on technology stocks.

He added that energy and infrastructure companies are poised to benefit as energy security becomes an increasingly salient issue — and as they emerge as strategic enablers of the AI economy.