End of Taiwan Stock Market Correction Signals Surge: Focus on Quanta, Hon Hai, Kingboard, Yageo, and Tian Erke

I. Market Structure: Volume Contraction Pullback, Bullish Framework Remains Intact

Today, the Taiwan stock market showed a pattern of "opening lower, oscillating, and pulling back for consolidation." It closed down 132 points at 48,024, with trading value around NT$737.9 billion. Ahead of the Mid-Autumn Festival holiday, market观望 intensified, compounded by U.S. tech stock corrections and a sharp rise in long-term bond yields, triggering profit-taking. This represents normal volatility at elevated levels.

Technically, the index continues to hold above the 10-day, monthly, and quarterly moving averages. Although short-term volatility pressure exists, there is no clear structural weakening signal yet. The key levels to watch going forward are the 48K psychological level and support from the 10-day moving average.

Since rebounding from the July 29 low of 39,384, the market has gained over 9,200 points cumulatively. Short-term positioning and valuations are indeed high, increasing the likelihood of heightened volatility. Therefore, chasing new highs is not advisable.

II. Fundamentals: AI Demand Remains Taiwan’s Key Pillar

August foreign orders surged past USD 100 billion for the first time, reaching USD 102.96 billion—a 71.4% year-on-year increase. Cumulative orders from January to August hit USD 704.99 billion, up 55% YoY, setting a strong growth record. The primary driver is demand for AI and emerging technologies.

Taiwan’s August exports also reached USD 82.4 billion, up 41% YoY, reflecting continued strong momentum in AI servers, semiconductors, and electronic components. The manufacturing production index rose 24.61% YoY in August, indicating solid fundamental support.

Therefore, in Q4, focus should remain on supply chains with real orders and earnings growth—such as AI servers, ASICs, advanced packaging, thermal solutions, PCBs, optical communications, and semiconductor equipment and materials.

III. Global Markets: Interest Rates and Oil Prices Are Key Short-Term Variables

The U.S. 10-year Treasury yield briefly spiked to 5.14%, the highest since 2007. The 30-year yield rose to about 5.4%, increasing market expectations of further Fed rate hikes, putting valuation pressure on high-P/E tech stocks.

Meanwhile, Brent crude oil prices reclaimed the $100 mark, and geopolitical tensions could push inflation and corporate costs higher. If both oil prices and interest rates remain elevated, they will become the biggest external headwinds for Q4 markets.

Thus, the key to future market direction isn’t just the “AI narrative,” but whether AI demand can consistently translate into revenue and EPS growth, and whether high interest rates begin compressing tech valuations.

IV. Q4 Industry Strategy: Stock Selection Over Market Timing

AI remains the core theme, including advanced packaging, high-end thermal management, PCB/CCL, ASICs, optical communications, and semiconductor equipment and testing.

The TSMC supply chain continues to benefit from 2nm capacity expansion and demand for advanced processes. Its October earnings call will be crucial for assessing AI demand, capex plans, and 2027 outlook.

Heavy electrical and power infrastructure are boosted by AI data center power demands; semiconductor materials benefit from advanced process expansions.

Operationally, priority should be given to stocks showing “revenue growth + EPS growth + institutional buying + strengthening price-volume dynamics,” rather than simply chasing popular themes.

V. Forward-Looking Risks: Don’t Ignore High-Level Volatility

- U.S. Treasury yields persistently above 5% - Oil prices surge again due to Middle East tensions - Slowdown in AI capital expenditure or ROI concerns - Declining trading volume at high levels, with institutions continuously adjusting positions - Rising costs in AI supply chains leading to lower-than-expected gross margins and corporate profits

VI. Conclusion: Fundamentals Remain Strong, But Timing Is Crucial

Overall, the Taiwan stock market remains in a “fundamentally bullish, high-level consolidation” phase. Record-breaking foreign orders, exports, and AI demand indicate solid support for Taiwan’s tech industry fundamentals. However, the 10-year U.S. Treasury yield breaking 5.1%, oil prices reclaiming $100, and the index’s 9,000+ point rebound from 39,384 have simultaneously increased short-term positioning and valuation pressures.

Therefore, avoid aggressive buying before the holiday. Afterward, monitor volume, the 10-day moving average, and performance of major AI-weighted stocks. If fundamentals and institutional buying continue, the market still has potential to challenge previous highs. Strategically, maintain “stock selection over market timing, buy on dips instead of chasing highs, and confirm with both fundamentals and volume.” Focus on companies that truly benefit from AI capex with high earnings visibility—such as ASIC designer eSilicon (3661-W), IP intellectual property firms Andes Technology (6533-W) and E-fuse (3529-W), PCB maker Kinsus (2368-W), AI power supplier Delta Electronics (2308-W), connector firm Molex (3665-W), copper foil producer Kingboard (8358-W), CPO turnaround play Quanta (2305-W), Jiajing (3016-W), Mosel (2342-W), diode maker Diodes Inc. (3675-W), Guang Hong Tech (6693-W), electronic parts firms Hottech (3114-W) and Lightyear (3624-W), laser and automation equipment makers Raytek (6207-W), Yi Chiang (3219-W), Sunlord (8028-W), Dongjie (8064-W), cleanroom equipment provider Han Tang (2404-W), LED turnaround plays Ledtech (5230-W), Hon Hai (6168-W), and passive component stocks with low bases. As long as the bullish control structure remains, pullbacks present attractive entry points.

The greatest risk in investing isn’t volatility,

but seeing the trend yet failing to act,

or missing the opportunity when it arrives.

Choosing the right industry > chasing news headlines

Timing the market > guessing daily highs and lows

Rare 1–2 month consolidations are golden opportunities

Anticipate a strong bullish reversal next week

Identify the new market leaders and rotate into them

Clarity emerges most clearly during consolidation

If you missed

Quanta, Hon Hai, Delta, Kinsus, and Molex in September,

the next batch of explosive stocks is already loaded and ready to surge

The upward AI megatrend is undeniable

Taiwan stocks create sweet opportunities through pullbacks

After chip distribution clears, the sweet spot to buy appears

Want to invest in high-potential, fast-rising stocks?

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Source: Lun Yuan Investment Consultant, Analyst Chen Xuejin

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