Has the Taiwan Stock Market Hit Rock Bottom? Final Washout of Deferred Selling Pressure – Don’t Get Shaken Out Before Valuation Recovery!

The broader market faced forced margin adjustments, triggering a chain of selling pressure that caused irrational market volatility. Many high-quality stocks with clean ownership structures were dragged down. However, as trading volume increased and the late-session decline narrowed, the accelerated bottom-fishing phase is nearing its end. When market sentiment is extremely suppressed, it often marks the eve of valuation recovery—don’t get shaken out before the light reappears.

〈Margin Chain Adjustments, Late-Session Support Signals Emerge〉

The Taiwan stock market opened flat today and continued to retreat, hitting a low of 39,384 points during the session. It closed down 1,564 points, just holding above the 40,000-point psychological level, with trading value surging to approximately TWD 1.08 trillion. Yesterday, margin balances dropped significantly by TWD 23.1 billion. After excluding ETFs, the overall market’s margin maintenance ratio has returned to a relatively neutral-low level of around 140%. Today’s main market pressure came from brokers initiating forced adjustments on margin accounts, causing continued spillover of margin liquidation selling. Some stocks had already fallen to margin call thresholds, but due to trading rules for designated stocks and liquidity constraints, stop-loss orders couldn’t be fully absorbed in one session and were deferred to subsequent trading days, further dragging down stocks that previously had healthier margin ratios. However, after today’s sharp drop, trading volume noticeably increased, and late-session declines began to narrow in some stocks, indicating that real bargain-hunting buying interest has started to enter the market.

〈Sentiment at Rock Bottom – Watch for Stabilization in Hard-Hit Sectors〉

Although the Ministry of Finance currently states that the National Stabilization Fund has no immediate plans to intervene, market sentiment has already reached a highly suppressed state. Looking back at this year, the Taiwan stock market’s earlier strong gains naturally led to more violent corrections. As margin balances rapidly decline and margin maintenance ratios approach historically low levels, ownership risks are gradually being released. Some deferred margin adjustment selling pressure may still appear in tomorrow’s early session, but the key focus moving forward is whether hard-hit sectors like passive components can stabilize first, and whether the weighted index can form a lower shadow or show volume-price stabilization signals. Once market ownership is cleansed, even minor positive data could trigger a significant rebound.

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〈Return to Industrial Value and Seize Valuation Recovery Opportunities〉

During the accelerated bottom-fishing phase, indicator stocks with margin maintenance ratios corrected to relatively low levels and solid fundamental support are worth adding to your medium-term watchlist. These include Creative (3443-TW) in the ASIC sector, Auras (3017-TW) in thermal module, and Unimicron (3037-TW) in ABF substrate. When market funds return to fundamentals, these stocks are well-positioned for valuation recovery. Advanced Optoelectronic (3362-TW), a key stock previously accurately positioned by Teacher Zhilin, surged to the daily limit today despite the broader market downturn. Its subsidiary, Keya Photonics, introduced capital from Largan Precision (3008-TW) through a share issuance, further solidifying their strategic partnership. Market attention remains focused on potential lens order shifts and cooperation opportunities in the CPO field.

The more volatile the market, the more investors should return to industrial trends, earnings data, and ownership structure. Don’t chase every rebound, nor abandon truly valuable stocks when market sentiment is most pessimistic. Identify the sectors most likely to lead the next wave of capital inflow and valuation recovery. We invite investors to download the 【Analyst Chen Zhilin APP】—real-time information is shared第一时间 within the app. Use data to master market timing, and each week we update the credit ownership watchlist to help you avoid risks and lock in opportunities.

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Source: Analyst Chen Zhilin / Kaixu Investment Consulting

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