TSMC Holds the Line! OTC Market Plunges Toward 'Extreme Bottom Zone,' Oversold Sectors Emerge at Sweet Prices!

The broader market is being supported by heavyweight stocks, while small- and mid-cap stocks face a deep shakeout amid rising panic. However, the U.S. market structure remains stable. As margin selling pressure subsides, the market is nearing its extreme bottom zone. High-quality sectors that have been oversold are now presenting excellent opportunities for strategic positioning.

TSMC Anchors the Index, Small-Caps Undergo Deleveraging

Taiwan's stock market opened higher but closed down 221 points, with trading value shrinking to NT$983.8 billion. TSMC (2330-TW) rose逆势 1.31% to close at NT$2,320, contributing approximately 238 points to the index. Excluding TSMC, the correction pressure on most small- and mid-cap stocks far exceeds the decline shown in the weighted index. The GreTai Market Index (GTSM) plunged as much as 5.55% intraday, closing down 2.62% with a clear lower shadow. From its peak, the GTSM has corrected by 22.2%, reflecting accelerated deleveraging and margin maintenance adjustments. If today’s margin balance drops further, and the quarterly moving average maintains an upward trajectory, the market is nearing its bottom zone—based on Analyst Chen Zhilin’s worst-case scenario of 39,800 points estimated during his Saturday livestream.

Reduce Short-Term Trading, Wait for Capital Re-concentration

In this difficult, volatile market, the priority is not guessing the daily low, but reducing unnecessary short-term trades to preserve capital and flexibility. The U.S. S&P 500 remains within a healthy 7,300–7,500 range, indicating the overall structure is intact. As long as the U.S. market does not enter a formal bear phase, this correction in Taiwan should be viewed as profit-taking after a rally—not a full reversal of the long-term trend. Should Taiwan’s market rebound, foreign institutional buying and active ETF flows are expected to first target large-cap leaders like TSMC (2330-TW), then gradually spread to fundamentally strong industry leaders.

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Industry Trends Unchanged—After Overselling, Fundamentals Will Prevail

Recent volatility has brought many quality stocks back to reasonable valuations. Heat dissipation leader Qioptiq (3017-TW) showed resilience last Friday but fluctuated today due to overall market sentiment. However, institutional funds have not withdrawn significantly. Stocks with unchanged fundamentals and institutional support present ideal opportunities to reassess strategic positions during pullbacks. ABF substrate equipment maker Chang Guang (7795-TW) benefits from strong ongoing client demand and unchanged capital expenditure, confirming the sector’s long-term direction remains intact. Core player Unimicron (3037-TW) will undergo re-pricing based on fundamentals and demand after this shakeout. Semiconductor specialty chemicals—closely tied to TSMC’s capex—and optical communications stocks, whose margin maintenance ratios have fallen to low levels, are also key sectors to watch in the upcoming recovery. Full-scale entry isn’t necessary before stabilization. Instead, gradually build positions in sectors with strong fundamentals and short-term advantages, using industry data, institutional holdings, and valuation metrics. Download the 【Chen Zhilin Analyst APP】 to receive real-time updates, data-driven insights, weekly margin watchlists, and risk-mitigation strategies.

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Source: Analyst Chen Zhilin / Kaishih Investment Advisory

Regarding the individual securities recommended or analyzed by our company, there are no improper financial interests. Past performance does not guarantee future profits. Investors should make independent judgments, conduct careful evaluations, and assume all investment risks.