Witness the 'Dominant and Joyful Earnings' Era: Shang Quan⊕, J&H⊕, Innolux⊕, Powerchip⊕

I. Overall Market Trend and Technical Structure

Today, the Taiwan stock market exhibited a 'gap-up, volatile, and upward' pattern, closing up 702 points at 44,928, maintaining a strong rebound trend.

The index successfully held above the 10-day and monthly moving averages and further broke through the quarterly line, signaling a clear technical strengthening.

Trading volume reached approximately TWD 848.8 billion, not yet significantly expanded, indicating investors remain cautious about chasing higher prices.

Resistance remains in the 45K–47K range due to trapped long positions, requiring short-term consolidation.

Support has gradually risen to around 43K, shifting the overall range to a '43K–47K box pattern with bullish bias'.

II. Positioning and Fund Flow

The three major institutional investors (foreign, proprietary traders, and investment trusts) collectively bought TWD 73.1 billion, with foreign investors leading the charge by buying back TWD 51.7 billion, providing critical market support.

Both proprietary traders and investment trusts took buying positions, indicating alignment between domestic and foreign investors toward a bullish stance.

Margin debt has significantly declined, effectively de-leveraging the market and stabilizing investor positioning.

Foreign investors shifting from net sellers to net buyers reflects correction of prior pessimism and gradual recovery of market confidence.

III. Fundamentals and Macroeconomic Environment

Taiwan’s Q2 GDP growth reached 13.72%, demonstrating robust fundamental momentum.

UBS revised its full-year GDP forecast upward to 11%, potentially marking the fastest growth since 1987.

Export momentum, corporate capital expenditures, and AI demand form three key growth engines.

Q2 earnings across listed and OTC companies were generally strong, supporting a medium-to-long-term bullish market outlook.

IV. AI Industry and Semiconductor Trends

Microsoft and Amazon reported better-than-expected earnings, confirming that AI investments are now generating tangible returns.

Market concerns over CSP (Cloud Service Provider) capex have eased, reaffirming the sustainability of AI demand.

AI infrastructure remains in the 'early stage of multi-year growth,' with a clear long-term trend.

Demand is expanding into GPUs, ASICs, advanced packaging, memory, power, and networking equipment.

The semiconductor correction is a de-leveraging process, not a sign of weakening fundamentals, suggesting potential for recovery.

V. Technical Trend Analysis

The index has strongly rebounded from the July 29 low of 39,384, forming a clear V-shaped reversal.

The 10-day moving average has turned upward, indicating a shift from bearish to bullish short-term momentum.

Despite resistance above, market inertia has changed, with bulls gradually taking control.

Supported by national team funds, ETF inflows, and domestic capital returning, downside risks remain relatively limited.

VI. Sector and Theme Rotation Focus

Semiconductor Supply Chain: Foundry, ASIC, and advanced packaging remain core themes.

AI Infrastructure Expansion:

- PCB/CCL (rising demand for high-frequency, high-speed materials) - Optical Communications (CPO, fiber optic components) - Power and Thermal Management (growing data center power needs) - Memory Sector: Benefiting from rising HBM and DDR5 adoption and price recovery. - Robotics: High growth potential as an AI application extension, emerging as a new market focus. - Industrial PCs: Gaining from smart manufacturing and AI deployment.

VII. Investment Strategy Recommendations

The broad market maintains a bullish-biased range-bound pattern. The primary strategy should be 'buying on dips'.

Strictly adhere to 'buy low, avoid chasing highs,' especially for short-term surging sectors like memory.

Stock selection priorities:

- High order visibility - Improving gross margins - Stable cash flow - Consistent institutional buying

Implement 'cut losers, hold winners' and adjust positions in stocks lacking fundamental support.

Control capital allocation and risk, avoiding excessive concentration or leveraged trading.

VIII. Conclusion

Overall, the Taiwan stock market has emerged from the previous panic-driven correction. With strong fundamentals, improved positioning, and long-term AI trends, a bullish structure is gradually solidifying.

While short-term resistance above 45K persists, consolidation may pave the way for future challenges to 48K or even 50K.

The current key is 'stock selection over market timing.' Capturing leading industries and growth trends will be central to generating alpha.

To succeed, be different.

The market is transitioning from a 'everything rallies' rebound to a true 'stock-picking' phase.

The focus is no longer on chasing indices, but on allocating capital to high-growth-potential companies.

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Source: Analyst Chen Hsueh-Chin, Luen Yuan Securities Investment Advisory

Our company has no improper financial interests in the securities recommended. Past performance does not guarantee future profits.

Investors should make independent judgments, conduct careful evaluations, and assume investment risks accordingly.