Despite Positive News, Taiwan Stock Market Struggles to Rally? Funds Rotate from High-Valuation to Low-Basis Stocks as Catch-Up Signals Emerge

Despite Positive News, Taiwan Stock Market Struggles to Rally? Funds Rotate from High-Valuation to Low-Basis Stocks as Catch-Up Signals Emerge

### NVIDIA Earnings Boost Market, But Capital Rotation Begins

NVIDIA's latest quarterly earnings and guidance exceeded market expectations, while the latest U.S. PCE inflation data aligned with forecasts, pushing Taiwan's stock market higher at the open. The weighted index reached a high of 46,401 points during the session, closing at 45,975 points with a turnover of NT$924.6 billion. However, TSMC (2330-TW) turned negative in the final minutes, causing the index's gains to narrow—indicating profit-taking pressure even after positive news.

While NVIDIA's results reaffirm the long-term AI trend, Taiwan stocks had already priced in much of the bullish sentiment ahead of time. The key now is tracking where capital is moving. Some funds are shifting into defensive sectors such as power, grid infrastructure, and related components. As the market seeks undervalued and defensive plays, previously high-flying stocks naturally enter consolidation.

### AI Long-Term Outlook Remains Intact—Take Profits on Overheated Names Like Auras (3017-TW), Holtek (4979-TW), and Opto (6442-TW)

With clearer signals of NVIDIA’s Rubin architecture entering mass production, the medium- to long-term visibility for high-end power supplies, power transmission, thermal solutions, and power-saving components continues to improve. Chih-Lin's favored thermal play, Auras (3017-TW), rose again today, hitting a new cycle high—confirming ongoing institutional support for the sector trend.

However, given the significant short-term gains, strategically trimming positions at higher levels remains a prudent way to balance profit and risk. The same logic applies to optical communication stocks: Holtek (4979-TW) approached涨停 (limit-up) before pulling back, while Opto (6442-TW) showed clear volatility. Both have solid fundamentals, but after strong rallies, relatively undervalued names like New Materials (4749-TW)—a TSMC consumables and specialty chemicals supplier that has undergone extended consolidation—are now showing signs of bottoming out and catching up.

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### Q3 Strategy Is Clear: Sell High, Buy Low to Maintain Control

Although trading volume has increased, further confirmation is needed for the index to sustain a strong upward move. With U.S. equities still at relatively high valuations, a range-bound, sector-rotating market in Taiwan is the most likely scenario. The Q3 strategy remains unchanged: sell high, buy low.

There's no need to aggressively increase exposure based on a single positive catalyst. Instead, maintain a neutral-to-low position size to preserve capital flexibility. For high-basis, overextended growth stocks, selectively taking profits isn't bearish on AI—it's about waiting for better risk-reward entry points. Use market pullbacks to re-enter through low-basis, fundamentally sound sectors. Download the 【Chen Chih-Lin Analyst APP】 to receive real-time updates, data-driven timing signals, and weekly margin/short-selling risk lists to avoid pitfalls and lock in opportunities.

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Source: Chen Chih-Lin Analyst / Kaixu Investment Advisory

The securities recommended and analyzed by our company involve no improper financial interests. Past performance does not guarantee future returns. Investors should make independent judgments, conduct careful evaluations, and assume investment risks accordingly.