Just how strong was the global stock market panic sell-off at the beginning of this month? As of this Wednesday, investors were still pulling out of the Vanguard emerging market stock ETF, with the ETF suffering its longest continuous outflow of capital since the outbreak of the COVID-19 pandemic, amounting to $75 billion in total.

As of this Wednesday, the Vanguard FTSE Developed Markets Index Fund, trading under the code VWO, has seen net outflows for ten consecutive trading days, with investors withdrawing a total of $2.12 billion. In addition to VWO, iShares, an emerging market stock fund invested by BlackRock, has also suffered from withdrawals.

After the “Black Monday” crash earlier this week, emerging market stocks experienced their biggest two-day rebound in nine months, but investor sentiment towards these stocks has yet to recover. Todd Sohn, an ETF and technical strategist at Strategas Securities LLC, said that the outflow of ETF funds indicated that large buyers may be closing their emerging market positions.

"Based on the sustained outflow of funds over the past week, large buyers holding VWO may be reducing their exposure. This typically means they are withdrawing from this asset class, perhaps not entirely, but at least reducing their percentage in their own asset allocation."

In the recent stock market turmoil, Asian stocks have underperformed, partly because tech companies such as Taiwan Semiconductor are being questioned by investors about whether their massive investments in artificial intelligence will yield the expected returns.

Wall Street News mentioned that the stock price of Taiwan Semiconductor, VWO's largest investment, plummeted to a record low on Monday. The stock price of Taiwan Semiconductor, which is listed on the Taiwan Stock Exchange, fell nearly 9.8% on Monday, the largest single-day drop since its listing, dragging down the Taiwan Weighted Stock Price Index by 8.4%, also setting a record for the highest single-day drop.

However, just on Monday, Morgan Stanley analysts listed Taiwan Semiconductor as their top pick, believing that after recent weak performance, the stock's valuation is attractive. Morgan Stanley analyst Charlie Chan wrote in his report, "In the long-term downturn of the semiconductor industry, we are bullish on Taiwan Semiconductor's quality and defensiveness." He also pointed out, "Confirmation of rising prices and continued strong capital expenditure on artificial intelligence (AI) should be key catalysts for Taiwan Semiconductor."

Chan expects that with the price increase, "Taiwan Semiconductor should be able to achieve more than 55% gross margin by 2025 and gradually reach the level of 60% gross margin between 2028 and 2030 after achieving economies of scale in overseas wafer plants."

Adam Lin, an analyst at Moore Securities Investment Consulting, commented that investors on Monday were indiscriminately reducing their positions in Taiwan Semiconductor without considering the company's strong fundamentals.

On Tuesday of this week, Taiwan Semiconductor's Taiwan stock rebounded strongly, up nearly 8%, and rose more than 4.5% on Wednesday, but fell 2.6% on Thursday. If Friday cannot reverse the downward trend, it will still close with a cumulative decline this week.

Synced with Taiwan Semiconductor's rise and fall, the MSCI emerging market index rebounded for two days with a 3.3% rise after falling 4.2% on Monday, but fell again on Thursday, with US stocks falling less than 0.3% at noon. This index briefly broke through its 200-day moving average, which is used to determine the upward or downward trend and resistance levels, in January for the first time. Meanwhile, analysts continue to raise the average expected profit of the MSCI index's constituent stocks for the next 12 months, with nine consecutive weeks of increases, reaching the highest level in two years.

In the options market, traders are less pessimistic about emerging market stocks than US stocks. On Monday of this week, the spread between the emerging market and US implied volatility indices on the Chicago Options Exchange fell to its lowest level since March 2020.