Pre-Mid-Autumn Caution Doesn't Hinder Bullish Structure! Institutions: AI Chain Continues to Lead, Taiwan Stock Market's Long-Term Growth is Clear

Affected by the wait-and-see atmosphere before the Mid-Autumn Festival long holiday, the Taiwan stock market has recently shown a high-level consolidation pattern. Although short-term selling pressure and a 'fear of approaching key levels' mentality are interfering, the bullish structure of the broader market remains solid thanks to bargain-hunting support and the backing of the AI sector. Institutions point out that with the rate hike cycle coming to an end, the market focus will shift back to corporate fundamentals. Benefiting from sustained AI capital expenditure and improved earnings growth visibility, the Taiwan stock market still possesses strong structural support and medium-to-long-term diffusion momentum.

Anlian Investment Trust's Taiwan stock team noted that the index had already risen significantly, leading to a 'fear of approaching key levels' mentality and pre-holiday adjustment selling pressure, causing divergence among electronics stocks and turning the broader market into high-level consolidation. However, the upcoming Xi-Trump meeting and the successive launch of new AI products are expected to help boost market confidence.

Xiao Huizhong, manager of the Anlian Taiwan Dam Fund, stated that the core factor affecting tech stock valuations remains the trend of U.S. Treasury yields. If yields remain relatively low, valuation pressure on high-growth tech stocks could further ease. With the rate hike cycle ending, the market focus will shift from interest rate policy back to corporate fundamentals, with third-quarter earnings results being a key focus. As AI infrastructure demand continues to expand, the industry fundamentals remain positive.

Looking ahead to the fourth quarter through 2027, positive factors such as AI supply chain earnings growth, volume ramp-up of new platform products, extended visibility of NVIDIA orders, and a recovery in market risk appetite will continue to play out. The overall market has the potential to evolve from rotational consolidation to a bullish diffusion pattern.

Although the pace of corporate earnings growth may slow from the high-speed growth of the first half to a healthier rhythm, the high continuity of AI capital expenditure, coupled with rising memory prices, means corporate earnings remain the core support for the Taiwan stock market. The market estimates that corporate earnings still have 20% to 30% growth potential by 2027, and the bullish structure remains unchanged. In terms of industry allocation, the team continues to favor sectors such as advanced packaging and testing, ASIC, high-end PCB and ABF substrates, CCL, CPO optical communication, thermal modules, inspection equipment, and guide rails.

Liao Benlong, manager of the Anlian Taiwan High Dividend Growth Active ETF (00984A-TW), pointed out that AI infrastructure, semiconductor equipment, memory, and PCB supply chains have structural growth advantages. However, high energy prices, geopolitical pressures, and fiscal pressures may slow the pace of inflation cooling, and the high-yield environment also increases the risk of stock market valuation volatility. Attention must still be paid to capital expenditure cycles and changes in market risk appetite.

Guo Jinpu, manager of the Anlian Taiwan Active ETF (00993A-TW), stated that the investment portfolio will continue to focus on the AI server supply chain, emphasizing corporate earnings verification capabilities and future EPS growth potential. The portfolio is built around growth and momentum factors, with value and low-volatility factors appropriately incorporated to balance growth pursuit with risk control, in order to cope with high valuations and market volatility.

※Disclaimer: The individual stocks, funds, and futures products mentioned in this article are for reference only and do not constitute investment advice. Investors should make independent judgments, carefully assess risks, and bear full responsibility for their own investments.