[Reporter Li Jinghui/Taipei Report] Taiwan stocks opened lower today (12th) and fluctuated around 49,000 points. How long will investors pay attention to Taiwan stocks? KGI Investment Consulting's analysis points out that Taiwan stock companies still have room to maintain double-digit growth for three years until 2028. Since this year, the average monthly net inflow of Taiwan stock ETFs is about 130 billion yuan, more than double that of last year. Coupled with the strong demand in the AI industry and driven by three bullish factors, the bullish trend in Taiwan stocks is not only expected to continue, but Taiwan stocks are expected to usher in the next stage of growth opportunities.
KGI's latest research report points out that the AI industry is still the most important driving force for the growth of the global technology industry. The upcoming financial reporting season is expected to continue the trend of continuous upward revisions in corporate profits since 2023. In addition, AI demand has gradually expanded from model training to inferential computing and AI Agent applications. The market size is rapidly penetrating from a few large customers to enterprises and terminal markets, and the growth momentum is more extensive and sustainable.
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KGI predicts that thanks to the surge in new AI chip products and the spread of demand, Taiwanese stock profits will continue an upward revision cycle. It is estimated that the profits of Taiwanese companies in 2026 are expected to grow by 53%. Under the high base period, there is still room for growth of 24% and 23% respectively in 2027 and 2028, and there are still opportunities for further upward revisions in the next few quarters.
On the other hand, although the Federal Reserve has entered a new round of interest rate hikes, KGI believes that the impact on the stock market evaluation will be relatively limited, because Taiwan stocks were affected by the deleveraging effect of the South Korean market in July this year and completed a wave of evaluation revisions ahead of schedule. In an environment of gradual interest rate hikes, the market has digested the risk of rising interest rates. Although the U.S. midterm elections may bring short-term fluctuations to the market, KGI's observation of historical experience shows that no matter how the congressional map changes after the election, the stock market will show an upward trend for more than a year after the election. The market will eventually return to fundamental factors such as corporate profits, business cycles, and liquidity, and the impact on mid- to long-term trends will be relatively limited.
It is worth noting that ETF funds continue to flow into Taiwan stocks, becoming the strongest supporting force for Taiwan stocks. KGI estimates that the average monthly net inflow of Taiwan stock ETFs this year is about 130 billion yuan, more than double the average of 60 billion yuan last year. Huge capital inflows have driven investment credit to over-buy Taiwan stocks for eight consecutive months since February. In the first nine months of this year, cumulative over-buying reached 780 billion yuan. Compared with trading funds that chase short-term market trends, this type of allocation funds pays more attention to long-term returns. Therefore, it not only helps reduce market volatility, but also provides stable support during pullbacks and strengthens downward support for Taiwan stocks.
Looking forward to the market outlook, KGI believes that with the support of the three major forces of profit growth, capital momentum and AI industry trends, the current stage of Taiwan stocks is not the end of this round of bull market, but more likely the starting point of the next stage of rising market. Therefore, short-term shocks should be regarded as mid- to long-term layout opportunities, and investment directions are recommended to focus on Rubin Ultra supply chain, AI ASIC, AI Agent, and other related groups that benefit from the expansion of AI infrastructure and applications.
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