Taiwan Stock Market Rebounds, Hits 43,000 but Swings Over 1,000 Points; TSMC Holds Gains, Defense-Related Stocks Surge

Taiwan's stock market (20th) opened strong, shaking off last Friday's record single-day plunge. Fueled by gains in electronic heavyweight stocks and a positive night session in Taiwan index futures, the market surged 413 points at the open, briefly reclaiming the 43,000 level. However, within minutes, the New Taiwan Dollar depreciated by 10 cents, triggering a sharp reversal that sent the index down 605 points, testing the 42,000 level. The intraday swing exceeded 1,000 points. The market later rebounded to trade up 160 points (0.37%) at 42,811, with estimated daily turnover reaching NT$1.51 trillion.

The over-the-counter (OTC) market opened down over 5% and remained down more than 2%, underperforming the main exchange.

Among heavyweight stocks, TSMC (2330-TW) opened higher and continued to rise, gaining over 2% or NT$50 to reach NT$2,340. Hon Hai (2317-TW) edged up 1.5%, MediaTek (2454-TW) turned negative after an early gain, falling 1.64%, ASE Holding (3711-TW) dropped 65, and UMC (2303-TW) plunged sharply after opening lower, briefly hitting the daily trading limit down.

Defense and drone-related stocks led today's gains, driven by the proposed 'Special Act for Indigenous Unmanned Vehicle Procurement,' which plans to allocate up to NT$210 billion in special budget from 2026 to 2031. This made defense and drone-related stocks market favorites. HANHWA (2634-TW) hit the daily limit up, while Anji (6477-TW), Jpp-KY (5284-TW), and Hoshine (1810-TW) briefly joined in hitting the upper limit.

Other stocks such as TransAsia (2630-TW), Pao Yi (8222-TW), and Coretronic (5371-TW) rose 7-8%, while CSBC (2208-TW) and Lungteh Shipbuilding (6753-TW) gained nearly half the daily limit up.

Passive component stocks corrected after recent gains. Multiple stocks were placed under special monitoring due to volatile trading, followed by warnings of large-scale delivery defaults. Additionally, some companies that pre-announced earnings reported losses, leaving fundamental support weak and dampening bullish sentiment. Nearly 10 stocks, including Yageo (2327-TW), Sunlord (2327-TW), Densitron (3090-TW), Kemet (2375-TW), Wah Hong (5328-TW), and Holtek (3026-TW), hit the daily limit down.

Institutional investors noted that amid rising concerns over overheated AI investments and the semiconductor sector entering a technical bear market, risk-averse sentiment has surged. Investors are advised to focus on defensive stocks with stable business and earnings, low sensitivity to economic cycles, consistent dividends, and low volatility, which may show resilience during market turbulence.

U.S. stocks closed lower again last Friday. The Dow Jones Industrial Average fell 406.55 points (0.77%), the S&P 500 dropped 76.08 points (1.01%), the Nasdaq declined 361.71 points (1.4%), and the Philadelphia Semiconductor Index (SOX) fell another 193.61 points (1.63%), officially entering a technical bear market, reflecting a more than 20% drop in semiconductor stocks from recent highs.