Historical Insight: After Taiwan Stock Market Drops Over 2,000 Points Intraday, Subsequent Positive Return Probability Is 100%

The Taiwan stock market has dropped nearly 4,000 points over two consecutive days, and today (30th), it briefly fell below the 40,000-point threshold after the opening, triggering widespread market panic. However, according to statistical data from Sinyi Asset Management, in the past, whenever the market dropped more than 2,000 points intraday, the subsequent market performance was strong, with a 100% probability of positive returns. Market analysts point to multiple factors behind investors' cautious sentiment, including Middle Eastern geopolitical tensions, Federal Reserve rate hike expectations, and margin selling pressure in the South Korean market that triggered circuit breakers. Short-term volatility in the Taiwan stock market is inevitable. Investors are advised to gradually build positions in Taiwan stock ETFs, which tend to have lower individual stock volatility.

Sinyi Asset Management's Taiwan stock ETF team notes that there have been six instances in history where the market dropped over 2,000 points intraday. Based on the four most recent measurable cases, the market averaged gains of 2.99%, 3.82%, 6.5%, 10.05%, and 10.98% over the following 5, 15, 20, 25, and 30 days, respectively, with a 100% probability of positive returns. Strategically, the firm recommends a 'buy-the-dip' and 'dollar-cost averaging' approach to manage price volatility risks during high-level market fluctuations.

Moreover, during market pullbacks, investors can opt for actively managed Taiwan stock ETFs, which offer both offensive and defensive flexibility. During consolidation periods, active ETFs can selectively target high-potential stocks, and during bull markets, they can aggressively overweight growth-oriented sectors to maximize excess return opportunities.

Chen Chao-cheng, portfolio manager of the Sinyi Technology Innovation Fund (00992A), emphasizes that despite challenges facing AI's outlook, Taiwan's position in the industry chain remains resilient as a key hardware supplier for global computing power, given the ongoing shortage in AI infrastructure demand. AI-driven tech orders remain in short supply, and the long-term bullish trend remains intact. The outlook for the broader market remains positive.

Overall, supply-demand imbalances in the AI supply chain are expected to become more pronounced in the second half of the year, benefiting Taiwanese manufacturers. Key materials such as fiberglass cloth, CCL, memory, ABF substrates, wafers, and passive components are expected to face shortages extending into late 2026 or even 2027. Therefore, the firm is optimistic about semiconductor advanced processes, semiconductor equipment, and communications sectors, as well as AI applications and productivity-enhancing industries.