Taiwan Stocks Rebound to 46,000! Investors Worry U.S. Inflation Could Be a 'Hidden Bomb,' Expert Debunks Myth: Decline Harms Market

After weathering the steep pullbacks of the past few weeks, Taiwan's stock market has gradually rebounded. On this day (13th), it opened higher and continued its upward momentum, closing up 503 points at 46,021, reclaiming the 46,000-point threshold. Financial writer Di Xiang analyzes that the market's concentration of holdings remains strong. However, some investors remain concerned about persistent high U.S. CPI and inflation risks. He emphasizes that "inflation moderation" and "inflation decline" are two distinct scenarios. "Moderation" refers to a slowdown in the pace of price increases, which is a significant positive. In contrast, actual "decline" could signal deflation, which would negatively impact the overall market.

Di Xiang notes on Facebook that with U.S. CPI meeting expectations, Taiwan's market has returned to 46,000, and U.S. stocks have further hit new highs. Reflecting on how Taiwan's market briefly fell below 40,000 just weeks ago, he remarks that the strength of post-deleveraging holding concentration and FOMO (fear of missing out) has once again become evident.

While some may argue that CPI remains high and the outlook is uncertain, Di Xiang stresses that the real concern should be whether inflation's growth rate is accelerating. "If, like now, it's not expanding, then this is indeed good news."

Is inflation always bad? Di Xiang emphasizes that investors must clearly distinguish between "inflation moderation" and "inflation decline." "Moderation"—a slowing growth rate—is a bigger positive. However, "decline" could indicate deflation, which would have negative implications for the market.

Di Xiang bluntly states, "Appropriate inflation is a good thing," as it sustains economic and corporate growth momentum. He remains optimistic about the market's outlook.

He does caution, however, that from a short-term perspective, the market appears slightly overheated. "I'm starting to gradually reduce positions in small batches. Opportunities will always exist, but if you don't manage risk properly, you might not get a second chance."

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