Stocks Want to Rest, But Falls Never Stop; Investors Want to Buy, But Trapped Again! Taiwan Stock Market Bottoming Blueprint?

The current wave of global deleveraging, originating from South Korea, has severely hit semiconductor and AI stocks under what can be described as a 'boiling frog' scenario. Why 'boiling frog'? From the end of June to last Friday, the Dow Jones and S&P 500 indices remained in a sideways trading range, with the Dow even slightly up compared to the end of June. The Nasdaq 100 index only declined by 6%. However, the Philadelphia Semiconductor Index (SOX) plunged 20%, entering a technical bear market.

As the focal point of this deleveraging sell-off, the South Korean index dropped 30%—a level of decline typically seen only during economic recessions or major political and economic shocks. Surprisingly, the Nikkei Semiconductor Index (200A.T), which includes 30 core Japanese companies in semiconductor equipment, materials, components, and IC design and manufacturing, also fell 30% from its peak. Clearly, the damage is not limited to South Korea; global semiconductor and AI stocks have suffered heavy losses in this correction.

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With both the South Korean index and the Philadelphia Semiconductor Index entering technical bear markets, market confidence is fragile. Bottoming and consolidation will take time, and volatility in both indices and individual stocks will remain high. Investors should closely monitor three key indicators during this correction in the Taiwan stock market: foreign institutional positioning, the South Korean market, and the SOX index.

Individual stocks will bottom out at different times. This week, leading large-cap stocks are expected to lead the way. TSMC (2330-TW) appears to have found support around 2,300 TWD. Other AI leaders and high-priced stocks such as Delta Electronics (2308-TW), MediaTek (2454-TW), Chuan-Hu (2059-TW), Wiwynn (6669-TW), Creative Electronic (3443-TW), and Accton (2345-TW) have also reached their respective near-term lows. Investors should watch for buying opportunities.

Small- and mid-cap stocks are expected to bottom out one to two weeks later. For inflation-related themes such as ABF substrates, silicon wafers, and memory, investors should monitor the performance of 'benchmark stocks' as their patterns differ. Meanwhile, 'passive components' remain in the storm zone. For information on which stocks are considered 'benchmark stocks,' join our LINE@ https://user225916.pse.is/money668 and message 'floor price'.

We reiterate: recent volatility in both indices and individual stocks is extremely high. Investors should minimize leverage, avoid short-term fluctuations, and observe whether deleveraging has truly concluded. Only when positioning has fully settled and market sentiment cools down will TSMC, large-cap leaders, and benchmark stocks serve as reliable indicators. After TSMC's earnings call, foreign institutions maintained their bullish outlook and raised their price targets. The long-term bullish trend for the Taiwan stock market remains unchanged. Want to catch the latest buying opportunity? Join our LINE@ now.

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Source: Moore Investment Consulting – Analyst Jason Yeh

The company has no improper financial interest in the individual securities recommended or analyzed. Past performance does not guarantee future profits. Investors should make independent judgments, conduct careful evaluations, and assume investment risks on their own.