Credit Control Eased, Funds Quietly Shift! Market Leadership Rotates – The Next Wave of Valuation Recovery is Here

The easing of credit controls has sounded the starting gun for capital to return. As large-cap heavyweight stocks enter a consolidation phase, market-leading funds are quietly shifting toward mid- and small-cap targets. Amid profit-taking pressure and battles around moving averages, irrational selling will only cause investors to miss out on the rally. By focusing on capital expenditures from global AI giants and solid fundamentals, investors can precisely position themselves ahead of the next wave of valuation recovery during this transitional phase of share turnover.

〈TSMC Weighs on Index – Funds Are Not Exiting, But Rotating〉

The Taiwan Weighted Index closed at 43,360 today, with trading volume reaching approximately TWD 1.03 trillion, remaining above the monthly average. TSMC (2330-TW) fell 2.1%, becoming the main factor suppressing the index. However, the GreTai Securities Market (GTSM) Index and mid-small cap stocks maintained strong performance, indicating that funds are not withdrawing entirely but are rotating from large-cap stocks to mid-small cap thematic plays. As Professor Zhi-Lin mentioned on his show, both the Weighted and GTSM indices have advanced toward their monthly moving averages, where profit-taking pressure has started to emerge. Short-term consolidation and turnover are entirely reasonable. Although the stock exchange’s relaxed trading suspension rules won’t officially take effect until August 10, the shortened suspension period and faster order matching have already improved market expectations for liquidity and trading confidence.

〈AI Investment Momentum Remains Strong – Optical Communication Emerges as Key Focus〉

Following strength in U.S. optical communication stocks, Taiwan’s supply chain quickly followed suit today. Guang Sheng (6442-TW) and Hwa Shing Light (4979-TW) both hit their daily trading limits, signaling that AI high-speed transmission and optical communication remain highly favored by capital. U.S. cloud service providers are gradually emerging from consolidation, with Amazon’s stock hitting a new all-time high—reflecting continued capital spending by global cloud providers on AI infrastructure. Taiwan’s latest July manufacturing PMI rose to 61.5%, remaining in expansion territory for ten consecutive months. The electronics and optoelectronics sectors continue to grow, and the tech industry’s fundamentals remain unchanged despite stock price volatility. The market isn’t lacking themes—it’s beginning to eliminate stocks that rose purely on sentiment and is reallocating capital to AI supply chain companies with real orders, industry trends, and clear growth visibility.

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〈Consolidation Before Moving Averages – Discipline Determines Success in Swing Trading〉

On the individual stock front, Unimicron (3037-TW), a leading ABF substrate player, briefly approached its daily limit but faced profit-taking near the quarterly moving average. Chicony Electronics (3017-TW) and Creative Electronics (3443-TW) saw profit-taking after consecutive rebounds—both normal during share turnover. As long as long-term industry trends and operational momentum remain intact, continuing to hold positions according to a swing strategy still offers higher win rates than hastily selling due to short-term volatility. Largan Precision (3008-TW) made a strong move today, driven by the CPO (co-packaged optics) theme. Going forward, watch whether Advanced Opto Electronic (3362-TW), which has deep industry linkages, follows with its own valuation recovery.

Sticking to cash trading and avoiding excessive leverage allows investors to maintain control in increasingly volatile markets. Next, focus on institutional fund flows, volume changes, and quarterly earnings reports. Real swing opportunities often begin only after the market completes its rotation. We invite investors to download the [Analyst Chen Zhi-Lin APP], where real-time updates are shared instantly. Use data to master market timing, and each week we update our credit position risk watchlist to help you avoid risks and lock in opportunities.

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Source: Analyst Chen Zhi-Lin / Kaihsu Investment Consulting

Regarding the individual securities recommended by our company, there are no improper financial interests. Past performance does not guarantee future profits. Investors should make independent judgments, conduct careful evaluations, and assume investment risks on their own.