Index Poised for Major Rebound: Largan,中美晶, AUO, Innolux in Focus

I. Market Structure and Positioning Changes

Index Trend: Volatile, trading in a lower range

The index dropped as much as 703 points intraday, hitting a low of 41,967, continuing the weak momentum from last week’s panic selling.

After 9:30 AM, national team funds, ETFs, and bargain hunters entered the market, quickly narrowing the losses.

The market closed down 221 points at 42,449, showing signs of stabilization but not yet turning bullish.

Trading Volume and Market Sentiment

Volume shrank to NT$989.5 billion, indicating weak follow-through buying after the panic sell-off.

This is a "volume contraction with stabilization," and future volume recovery needs to be monitored.

Institutional Investor Trends

Foreign Investors: Net selling sharply reduced (from NT$189 billion to NT$6 billion)

Proprietary Traders: Also reduced selling (from NT$82.1 billion to NT$8 billion)

Investment Trusts: Continued buying (from NT$9.5 billion to NT$14.6 billion)

→ Market positioning shifted from extremely bearish to neutral-to-stable

II. Reasons for Decline and Market Risks

Fundamental Positives Losing Momentum

TSMC (2330-TW) earnings利好 have been fully priced in.

Market focus has shifted to gross margins and the sustainability of AI demand.

AI Bubble Concerns Rising

Valuations are too high, triggering deleveraging.

High-flying stocks are undergoing chain corrections.

Macro and Geopolitical Risks

U.S.-Iran tensions rising → upward pressure on energy prices

Global inflation and interest rate uncertainty resurfacing

Funding Pressure

High margin debt levels → ongoing deleveraging effect

Foreign investors’ continued adjustments are suppressing rebound strength

III. Technical Analysis and Future Outlook

Short-Term Range-Bound Trading

Support Level: 40K (previous low and psychological level)

Resistance Level: 45K (10-day and monthly moving averages)

→ Expected range: consolidation between 40K and 45K

Rebound Probability and Historical Statistics

After a single-day drop ≥1,500 points:

5 days later: +4.88%

10 days later: +4.87%

20 days later: +7.9%

30 days later: +13.3%

40 days later: +18.6%

Win rate: over 90% (100% within one month)

→ Short-to-medium-term rebound is highly probable

Key Indicators to Watch

Whether the index regains the monthly moving average

Whether volume expands beyond NT$1.1 trillion

Whether foreign investors shift from net selling to net buying

IV. Medium-to-Long-Term Fundamental Support (Bullish Core)

AI Industry Structural Upgrade

From Generative AI → Agentic AI

Computing demand surges, driving supply chain upgrades

Semiconductor Technology Drivers

Advanced Process: N2P, A16 mass production upcoming

Advanced Packaging: CoWoS capacity expansion

New Technologies: CPO silicon photonics accelerating adoption

Global Capital Expenditure Surge

2026: $805 billion

2027: $1.1 trillion

→ AI infrastructure entering a "super cycle"

TSMC Key Metrics

EPS upgraded to NT$105–110 (2026)

2027 forecast: NT$140–150

AI demand is "extremely strong"

→ TSMC remains the core pillar of Taiwan’s long-term bullish market

V. Industry Mainstream Trends (Bullish Themes Unchanged)

ASIC / IC Design (Custom Chips)

Advanced Packaging (CoWoS / CoPoS)

CPO / Silicon Photonics

ABF Substrates / PCB / CCL Materials

Memory (DDR, HBM)

Passive Components

Semiconductor Equipment and Automation

Low-Earth Orbit Satellites and HPC Infrastructure

VI. Stock-Specific Strategies and Recommendations

Rebound Opportunities Emerge

Most AI stocks corrected 30%–50%+

Technically positioned for a rebound

Rebound Resistance Zones

Monthly moving average

Quarterly moving average

Previous high neckline

→ Trim positions on rebound; avoid chasing highs

Core Operating Principles

Buy low, don’t chase high

Rotate out of weak stocks, hold strong ones

Build positions in batches

Strictly control capital and leverage

Stock Selection Focus

Low-base-turnaround stocks

Stocks with explosive revenue growth in H2

Stocks with institutional accumulation

Long-term growth stocks in the AI supply chain

VII. Conclusion

Short-Term: Post-panic consolidation phase; rebound expected but limited in upside

Medium-Term: Range consolidation between 40K–45K, awaiting dulling of negative catalysts

Long-Term: AI trend unchanged, strong fundamentals support bullish outlook

Overall View: Short-term neutral, long-term bullish. Focus on stock selection and timing control.

After panic selling

A major rebound could emerge at any moment

Which stocks deserve attention?

Which stocks should be rotated out?

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Source: Lun Yuan Investment Advisor, Analyst Chen Xuejin

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Have no improper financial interests. Past performance does not guarantee future profits.

Investors should make independent judgments, carefully evaluate, and bear investment risks on their own.