During the trading session on May 12, Taiwan's stock market crashed. When I saw the pop-up window of the early warning on the morning of the 12th, the Taiwan Weighted Index (TWII) had fallen by 8%, the biggest plunge in history in the past 45 years. The closing price of the day closed down 4%. Today (13th) opened opened 2% lower.
TWII, which included the 3.79% drop on May 11, erasing 8% in two days. This "collapse" decline method appeared in the financial markets around the world in March 2020.
However, after the panic in 2020, the index rebounded violently, from 8500 to 17700, and it also fell by 15,000 in the past two days. Look at my big A... Alas, I can't be so sorry for the iron.
Today (13th) TWII opened 2% lower and then rose. Did the panic disappear? This article will talk to you about the three major reasons for the collapse of
- How will the development of the situation affect the global industry
TW Three major reasons for the collapse of the stock market
1. The case of the new crown at unknown sources has caused concerns about the pillar industries
0 The main reason is the panic caused by the epidemic. On May 11, 7 local cases of new crown were found in Taiwan, and 6 of them could not find the source. The source of
is unknown, which means that the traceability investigation cannot be carried out, the close contacts cannot be isolated in a targeted manner, and the development of the epidemic is difficult to control.
The head of the Taiwan Epidemic Command Center said on the 11th that Taiwan has entered the stage of community infection.
was announced on May 12, with 21 new confirmed cases of new coronary pneumonia on the same day, of which 16 were local cases, setting a single-day high since the epidemic. In addition, 4 cases were immigration from abroad and 1 case was to be investigated.
In addition, under the shadow of the daily confirmed cases in India exceeding 400,000, more than 70 Taiwanese working in India transferred back to Taiwan through Japan in May. According to Taiwan data, 73 people were inspected by India's flight back to Taiwan, and 5 have been confirmed positive so far, and 27 people are still under re-examination.
From the trading market on May 12, the trading volume of electronic stocks accounted for 40%. The main force leading the decline is the electronics industry.
Several heavyweight stocks in the Taiwan stock market are all manufacturing industries. Among them, Taiwan Moutai - TSMC has a weight of about 30%. TSMC and Hon Hai 's dived into , directly pressing more than 100 stocks to the limit down line.
The main force of the Taiwan stock market, you can refer to the weighted stocks of Taiwan 50. Looking around, electronic stocks account for the majority.
includes the opening today, and a bunch of stocks are still falling:
Previously, the epidemic in Taiwan was well controlled, and the economic recovery process was faster. The economy maintained a growth of 2.98%, ranking first among major regions in the world.
However, the vaccination rate in Taiwan is currently low (1%). If the epidemic spreads and affects the start of construction, it will be a heavy blow to the real economy and the stock market.
2, global technology stocks fell, exacerbating market panic
0 The United States released its April CPI data last night, and experienced an epic round of flooding. The expected value was 3.6%. In the past decade, 3.6% was considered high.
Good guy, the announced result is 4.2%, directly setting a new high in 10 years.
Because inflation exceeds market expectations, Fed expects interest rate hikes ahead of schedule, and stocks and bonds doubled. High inflation means that rate hikes is not far away. Biden is also preparing to increase taxes. This series of actions has brought absolute suppression to current high-valuation technology stocks.
Chinese and US technology stocks have experienced a significant increase. If you are knocked down, the downward magnitude will be even greater.
But the weighted stocks in the Taiwan stock market are all technology stocks.
3. MSCI lowered the market weight of the Taiwan Stock Exchange nine times in a row. The last critical hit was
. MSCI announced that it will lower the weight of the Taiwan stock index in emerging markets to 13.95%, a ninth consecutive drop. The latest weight will take effect at the close of May 27.
MSCI (MSCI) is an internationally authoritative index, behind which is the passive allocation funds of day-to-day . The weight of the Taiwan Stock Exchange index in emerging markets has been lowered, which is the direct impact that a large number of passive allocation funds in the stock market will be withdrawn, and the long-term impact is that the market's voice is gradually weakening.
TSMC plays an important role in alleviating the global production capacity shortage.
Taiwan provides 65% of the world's chip production. In the era of the Internet of Things, chips are the heart. After the outbreak of the epidemic, the whole world lacks "core". If the epidemic in Taiwan cannot be controlled quickly, the chip shortage will intensify.
Why does the epidemic cause chip shortage? The logic is:
(1) During the epidemic, demand for electronic products surged and large production facilities were interrupted, and chip supply was tightened.
(2) Companies have stepped up their stockpiling, exacerbating supply shortage.
(3) Manufacturers allocate production capacity to high-profit products, and medium- and low-profit chip production is ranked behind (such as home appliances and mobile phones).
The market’s concerns stem from this logic. After all, chip supply in various countries is tight, and TSMC plays an important role in alleviating the global production capacity shortage.
Since 2021, chip foundries around the world have been operating in full production. Leading semiconductor companies have announced a number of expansion plans:
ying TSMC will increase capital expenditure in 2021 to US$30 billion, and said it plans to invest $100 billion in the next three years to increase production capacity; Intel In March 2021 announced that it will spend $20 billion to establish two new wafer factories in the HK ArizonaHK ArizonaHK At the same time expanding production in Beijing, it also recently announced that it will expand its 12-inch wafer production capacity in Shenzhen.
However, the epidemic in India was out of control, the epidemic in Taiwan reached a new high, the epidemic in the community was confirmed, the fall of Vietnam Nepal, and the global semiconductor production center, Marasia announced its closure.
Black swans are everywhere...
At present, in addition to requiring internal employees to go to work in different places, visitors are also suspended from entering the factory. TSMC said that in response to the expansion of the epidemic, guests and visitors have been suspended from entering the company. At the same time, employees are required to avoid face-to-face meetings with suppliers and reduce non-essential gatherings and activities. Meetings are given priority to remote connections to reduce the flow of people across factories.
It is true that the fermentation of the epidemic will intensify the global price increase and shortage of semiconductors. But from another perspective, overseas supply is restricted, which will inevitably lead to the transfer of some mature process orders to the mainland, accelerating the domestic substitution process of my country's integrated circuits and key components.
hopes that mankind will overcome the epidemic as soon as possible.
Reference
"India's epidemic is out of control again, some emerging market stock markets may be under pressure", Sichuan Finance Securities
"India's storm: virus mutation, epidemic prevention and control and black swan", Industrial Securities
" Science and Technology Innovation Board semiconductor financial report scan: The industry's high prosperity is the norm, and there are many highlights in the wafer manufacturing field", Anxin Securities
TaiwanIndex (USD), MSCI.
