Is Taiwan's Stock Surge a Mirage? Beware Another 10% Drop If You Miss This Signal!

Last Friday, Taiwan's stock market recorded its largest historical drop! This sharp decline is less about fundamental problems and more about a regional Asian market deleveraging that triggered an oversold phenomenon. Imagine this: Korea's 2x and 3x leveraged ETFs went out of control, collapsing like dominoes. Foreign investors, unable to adjust positions in Korea, turned to dump Taiwan and Japanese stocks—markets with the highest liquidity. This is the main reason why Taiwan's market fell harder than expected.

Historical data never lies: next to every crash lives massive profit.

As German investing legend Kostolany once said: 'Those who don’t hold wheat during a downturn won’t have wheat when wheat prices soar in the future.' If you panic-sell your core holdings at rock-bottom prices out of fear, I guarantee: when Taiwan's market surges again in August or September, you’ll only watch others make huge gains.

AI remains the only king! TSMC and the Four Diamond Industries' Comeback

According to the latest earnings call and public financial reports from the 'National Guardian Mountain' TSMC (2330-TW), although short-term gross margins were slightly adjusted due to seasonal factors, TSMC has once again raised its capital expenditure! What does this mean? The tech sector's underlying AI demand is 'unshakable.' Looking back at history, every time TSMC pulls back to its 20-day moving average, it often marks the sweetest long-term 'gift from God.' As we approach late July to the first week of August, most AI-related stocks are about to hit the 'three-lows' signal. Be sure to add the following four diamond industries to your watchlist:

1. Semiconductor Army (TSMC Supply Chain, Memory)

Buying TSMC at specific low price ranges offers extremely high odds of success. Its equipment, facility, and advanced packaging supply chain will benefit simultaneously. Additionally, memory industry Q3 contract prices are expected to rise. After corrections created value gaps, Nanya Technology (2408-TW) and Winbond (2344-TW) present excellent entry points.

2. Passive Components and PCB/Carrier Boards

The full upgrade of AI servers has caused MLCC usage to explode by 8x! Yageo (2327-TW), Walsin Technology (2492-TW), Nippon Electric Works (3090-TW), and Mijin (8043-TW) are seeing opportunities re-emerge after correcting excessive positive deviations. Meanwhile, the 'Big Three' in PCB and carrier boards—Unimicron (3037-TW), Nanya PCB (8046-TW), and Zhen Ding-KY (4958-TW)—are expected to enter their true main uptrend in August.

3. Stocks Quietly Accumulated by Institutional and Large Investors

Beyond industry trends, market positioning never lies. Recent data shows three major forces are quietly building positions in specific stocks:

Foreign investor favorites: Hwa Shine (4979-TW), Lilon Electric (2472-TW)

Securities trust favorites: China Synthetic Crystal (5483-TW), Kuo Hsing Chemical (4722-TW)

Large traders' picks: IET-KY (4971-TW), Yichuan (2486-TW), Chinten (4534-TW)

Key Strategy: Don’t Move Until the 'Bottoming Four-Step' Appears!

While I’m highly optimistic about a major rebound in August, decisions must still be evidence-based! If Taiwan’s market rebounds 1,000 points on Monday, do NOT let excitement drive you to chase high prices! A true bottom isn’t formed in one day—it requires four steps: 'sharp drop, consolidation, gap, breakout.' Treat the following 'bottoming survival signals' as your risk management SOP:

Candlestick & Gap: On 60-minute or daily charts, a 'gap-up + not filled within 3 days' or a volume-backed long green candle/long lower shadow must appear—this shows institutional players are spending real money to defend the market.

Exchange Rate Indicator: The New Taiwan Dollar must stop depreciating and start recovering, signaling foreign capital is halting outflows and returning to embrace Taiwan stocks.

Position Cleansing: On days of big gains, margin buying ('financing') must NOT surge simultaneously—positioning must remain clean.

Foreign investor futures short positions and options hedging positions show clear declines, indicating improved market risk appetite.

Only when these conditions gradually align will Taiwan’s market have a stronger chance of launching a new upward wave.

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Source: Moore Investment Consulting – Analyst Chiang Kuo-Chung

The securities recommended by our company have no improper financial interests. Past performance does not guarantee future profits. Investors should make independent judgments, conduct careful evaluations, and bear investment risks on their own.