Unveiling the Irrational Surge and Crash of Taiwan's Stock Market: Juan Mu-Hua's Fundamental Analysis Reveals Panic Won't Last

Taiwan's stock market has recently suffered a major downturn, with the index continuing its decline today (29th), briefly dropping below the 40,000-point level before barely recovering at closing. Many investors who entered the market at recent highs are now facing significant losses, plunging the market into panic.

In response, financial expert Juan Mu-Hua stated on the program "Financial Road to Prosperity" that the market over the past few months has been dominated by extreme optimism and extreme fear, but fundamentals have remained unchanged. "After these few days of emotional release reaching an extreme, market direction will become clear."

Juan emphasized that today's massive sell-off in large-cap stocks, along with popular stocks collapsing, proves market panic. "To say the market isn't panicking is lying." The short-term decline has already reached the intensity seen during last year's tariff disputes. Stocks hitting trading limits aren't small caps but major blue-chips among the top 100 by volume, including UMC, National Chiao Tung University, Sun Yen, Nanya Technology, Nanya, and ASE. "Which of these have you never heard of?"

How low will Taiwan's market go? Juan stated, "Hell has only eighteen levels at most." From a sentiment perspective, current market pressure and atmosphere far exceed levels seen two weeks ago. Although margin debt has decreased, the reduction came too late, indicating insufficient market sensitivity and investors' failure to anticipate such a steep drop.

Juan stressed, "Based on my 20-30 years of stock market experience, short-term movements are absolutely driven by sentiment, while medium-to-long-term trends are driven by fundamentals." When market sentiment is overly excited and risk awareness is lost, stock prices often deviate from their intrinsic value. Conversely, when sentiment collapses, prices also diverge from fair value.

Juan analyzed that the overall economic fundamentals haven't changed. "The deepest hell has only eighteen levels." The bottom is created by short-term sentiment, not fundamentals, and market emotions are currently being released. Moreover, "what goes up the same way comes down." Taiwan's market surged 16,000 points (51%) in just over two and a half months, compared to an average annual gain of around 25%, so the pullback force is naturally immense.

Did blind buying at highs cause the damage? Juan stated that the most hyped mid-cap and small-cap stocks were also the most detached from fundamentals and most overvalued. "I truly find it unbelievable—some stocks had P/E ratios as high as 100 times at their peak. Why would you pass on TSMC with a 20x P/E and put your money into such stocks? Why would you impulsively buy at that point?"

Juan bluntly stated that the key is "sentiment." The massive gains over the past two months and the current deep losses are both sentiment-driven, fundamental-ignoring rallies. "Have fundamentals deteriorated? No. Has the AI outlook changed due to the market drop? No." Panic's explosive power is strong, but its duration is short. Once emotional release reaches its extreme in these few days, market direction will emerge.

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