Taiwan Stock Market Rout Sinks 3,737 Points, Breaks Annual Support; Lai Vows Stabilization

Taiwan’s stock market on Friday (the 6th) faced severe selling pressure. A broad slump across all four major U.S. indices weighed on sentiment, and the weighted index declined from the open, hitting an intraday low of 37,837 points—a drop of 3,737.67 points. It not only broke below the 40,000-point threshold and the annual line of roughly 38,827 points, but also set a record for the largest single-day intraday point drop in Taiwan stock market history. This marked the sixth consecutive trading session in the red, with the cumulative decline exceeding 5,000 points, leaving market sentiment extremely tense.

Facing the severe financial market turmoil, President Lai Ching-te attended the opening ceremony of the “2026 ITF Taiwan International Travel Fair” in the morning and made a special statement on the stock market while touring the American pavilion. He characterized the correction as a “predictable reaction” to the U.S. midterm election results and urged citizens to remain calm.

Lai said the U.S. midterms had just concluded, producing a new political landscape, and that the financial market reaction was an expected phenomenon. He emphasized: “The world has entered the era of artificial intelligence, and this pace will not change—meaning that Taiwan’s tech industry will continue to develop in the future, and this too is predictable.”

He then addressed investors: “So regarding the changes in financial markets over the past two days, I ask our citizens not to panic. The government will closely monitor every development and roll out policies so that the entire financial market can stabilize as soon as possible.”

The trigger for this stock rout came from the U.S. midterm elections, in which the Democratic Party won a landslide victory and flipped Congress. Markets feared that AI and data-center-related policies would face stricter regulation, causing AI concept stocks and memory chip shares to be heavily sold off. The Philadelphia Semiconductor Index plunged more than 12% in a single day, all four major indices collapsed, and panic selling quickly spread to Asian stock markets.

Taiwan’s stock market carnage on Friday was concentrated in AI concept stocks and memory chip shares, with heavy selling pressure on heavyweight electronics stocks dragging the broader market below key support levels.

Notably, Taiwan’s stock market had just hit an all-time intraday high of 49,968 points on October 6. Within just one month, the market reversed sharply, and on Friday it directly broke through the 40,000-point mark—the magnitude of the swing between highs and lows caught the market off guard.

As the president spoke, financial and monetary authorities also swung into action. Taiwan’s Financial Supervisory Commission Chairman Peng Jin-lung, interviewed in Kaohsiung on Friday morning, said a special task force meeting would be held Friday afternoon to announce market-rescue measures. The market is closely watching whether short-selling restrictions will be imposed. While Peng did not directly confirm, he hinted that he could “give a preview,” indicating that market-stabilization policies are ready.

National Stabilization Fund manager and Deputy Finance Minister Juan Ching-hwa emphasized that Taiwan’s economic “fundamentals” are very good, but the National Stabilization Fund will not sit idly by while the stock market crashes. If the market becomes disorderly or confidence collapses due to irrational factors, an ad hoc committee meeting would not be ruled out to discuss countermeasures.

Looking at Friday’s trading, Taiwan’s stock market gapped down sharply at the open, briefly falling below the 38,000-point mark intraday before paring some losses, though selling pressure remained heavy. Institutional investors noted that short-term market sentiment is being dominated by U.S. political variables, with AI regulatory risk becoming the main reason for capital outflows. Heavyweight electronics stocks and high price-to-earnings growth stocks bore the brunt.

From a technical perspective, Taiwan’s stock market has successively broken below the 40,000-point level and the annual line, weakening the technical picture. In the short term, observers will need to watch whether trading volume expands and whether the National Stabilization Fund enters the market to determine if a bottoming signal emerges.

Overall, this pullback represents a sharp correction for Taiwan’s stock market after hitting an all-time high. The U.S. midterm election results changed market expectations for AI industry policy, becoming the final straw that broke the bulls’ back. From the president to financial and monetary authorities, the government has spoken with one voice, attempting to combine confidence-boosting rhetoric with policy tools to prevent panic from spreading further.

Key items to watch going forward include: whether the Financial Supervisory Commission’s afternoon special task force meeting rolls out concrete measures such as short-selling restrictions, whether the National Stabilization Fund convenes an ad hoc committee to authorize market entry, and whether U.S. stocks can stabilize after the midterm elections are settled. For investors, short-term volatility risk remains high, and the market will seek a new equilibrium between policy and fundamentals.

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