Spotlight Stock: Middle East Tensions Boost Oil Prices, Formosa Chemicals Hits Limit Up, Leading the 'Four Treasures' Higher

Supported by a rebound in U.S. semiconductor stocks, Taiwan's stock market launched a strong recovery today (21st). Fueled by momentum in heavyweight stocks, the market opened higher and surged over 1,500 points at its peak, achieving a broad-based rally. Notably, with renewed U.S.-Iran tensions reigniting the Middle East conflict, international oil prices reversed their decline and rebounded. This uplifted Formosa Chemicals (6505-TW), which, backed by ten consecutive days of foreign institutional buying, opened sharply higher and quickly reached its daily limit at NT$85.40, energizing group affiliates FCFC (1326-TW), Nan Ya (1303-TW), and Formosa Plastics (1301-TW), all of which rose more than half a trading band.

Formosa Chemicals recently announced a slight loss in June, but benefited from low-cost feedstock, achieving an EPS of NT$2.18 for Q2 2026 and a cumulative EPS of NT$4.32 for the first half of 2026—second only to Nan Ya's NT$5.17 among the 'Four Treasures' of the Formosa Group.

According to a local brokerage report, Formosa Chemicals' Q2 2026 earnings exceeded market expectations. With the refining sector's outlook improving in the second half and production capacity recovering, and given that its current valuation remains historically low, the firm maintains an 'Accumulate' rating, raising its target price to NT$100.

Looking ahead, institutional analysts note that as Formosa Chemicals completes its major scheduled maintenance, daily refining capacity is expected to rise to 460,000 barrels in August, lifting refining utilization to 87%. While the olefins business remains affected by maintenance, average operating rates are expected to slightly improve compared to Q2. Coupled with the third quarter being the peak season for the petrochemical industry, upstream feedstock prices for ethylene and propylene are expected to remain bullish.

Recently, Formosa Chemicals has led the group's stock performance, climbing from around NT$55 in early July to today's limit-up, achieving a cumulative gain of approximately 55%—reaching its highest level in nearly three years.