Taiwan Stock Market Opens Weak: Low Trading Volume, Heavyweights Dragged Down; TSMC Leads Over 600-Point Drop, Testing 43,000 Level

Due to shrinking trading volume and declining margin financing at high levels, benchmark stock TSMC (2330-TW) opened down over 0.64% today (27). At the same time, declines in heavyweight stocks such as Hon Hai (2317-TW) and MediaTek (2454-TW) further suppressed the broader market index. After already breaking below the 20-day moving average, the index dropped over 600 points in early trading, briefly touching 42,969.48, falling below the 43,000 threshold.

Meanwhile, early sessions in South Korea and Japan hovered near flat, offering little support to Taiwan's market. Taiwan's electronics sector declined 0.63% in morning trade, accounting for 81.88% of total turnover, with quartz component stocks showing relative strength.

The Taiwan stock index opened at 43,585.92 and trended lower in early trade, with estimated full-day turnover around NT$670 billion. Senior securities analyst Jane Chien noted that the current market shows shrinking trading volume and reduced margin financing. While the key focus is whether the index can stabilize above the 20-day moving average, resistance from the 30-day moving average above remains strong. Investors should exercise greater caution in managing capital.

In today's market performance, TSMC declined to a low of NT$2,330. MediaTek dropped NT$115 (3.07%), and Hon Hai fell 0.99% (NT$2.5) to close at NT$250.

Among quartz component stocks, Jatek (3042-TW) underperformed, while others including Jia Gao (8182-TW), Anqi (617-TW), and Taiwan Kasado (3321-TW) rose.

In the IC substrate sector, Unimicron (3037-TW) and Nanya PCB (8046-TW) saw share prices decline.

Uni Securities noted that Google's capital expenditure has surged. This week, Microsoft, Meta, and Amazon will report earnings, revealing profitability and free cash flow under high AI-related capital spending. Continued investment in AI hardware will benefit Taiwan's AI supply chain with sustained order inflows. Temporary ceasefire between the U.S. and Iran has led to lower oil prices and U.S. Treasury yields, reducing short-term risk aversion and supporting a potential rebound in Taiwan stocks to retest the 30-day moving average. However, Taiwan's Financial Supervisory Commission has launched a special audit on the 'four-loan package,' creating short-term pressure from 'de-leveraging' in the market. Amid this leverage contraction phase,

Uni Securities advises maintaining moderate capital flexibility, avoiding excessive leverage, and during rebounds, trimming weak stocks while holding strong ones. Stock selection should focus on mid-to-large cap AI-related stocks with high liquidity. Long-term tracking sectors include: TSMC and advanced process/packaging, substrate and PCB, power management, server racks, robotics concepts, specialty chemicals, and bicycle-related stocks.

Regarding market outlook, KGI Securities stated that the market remains in a volatile consolidation phase. Investors are advised to adopt a 'stock-picking over market-timing' strategy. U.S. Intel's Q2 earnings significantly exceeded market expectations and it raised its capital expenditure forecast, committing continued investment in advanced process equipment and facility setup. This is expected to boost demand in the semiconductor equipment supply chain. Investors may consider gradually building positions in related stocks during price pullbacks.

Last Saturday morning, U.S. markets closed with the Dow Jones Industrial Average up 235.60 points (0.46%) at 51,947.25. The Nasdaq Composite fell 161.87 points (0.64%) to 24,975.82. The S&P 500 rose 3.68 points (0.05%) to 7,411.98. The Philadelphia Semiconductor Index plunged 524.95 points (4.25%) to 11,818.89.