Taiwan stocks fell 4.47% this week. Investor Trust: The AI investment wave continues and the bullish pattern of Taiwan stocks remains unchanged.

Taiwan stocks rebounded after the shock, with foreign investors selling more than 586.2 billion yuan in a single week, and AI themes still support the market outlook for Taiwan stocks. (Photo by reporter Wang Menglun)

[Reporter Wang Menglun/Taipei Report] After Taiwan’s stock market plunged 1,655 points on Thursday, the market quickly rebounded and rose by 141.39 points on Friday, closing at 47,111.26 points; of which, this week’s decline 4.47%. In addition, foreign investors continue to underweight Taiwan stocks, with foreign sales exceeding NT$586.229 billion in a week. Investment institutions said that despite the recent sharp turmoil in the international stock market, overall, with the continued wave of AI investment and the sustainable growth trend of profits for Taiwanese companies, the bullish pattern of Taiwanese stocks remains unchanged, and the chance of challenging new highs in the future is still high. Therefore, it is recommended that investors can take advantage of the sharp decline and bargain hunting to deploy Taiwanese ETFs in batches.

In this regard, Wei Yongxiang, manager of the New Taiwan Advantage Growth Active ETF Fund (00987A), pointed out that AI noise has increased recently, and the annual growth rate of the U.S. Consumer Price Index (CPI) in September rose from 3.4% in August to 3.7%, which is higher than market expectations. Excluding food and energy, the core CPI increased by 2.6% year-on-year, which was also higher than market expectations. Inflationary pressure has increased again, causing the market to re-evaluate the possibility of subsequent interest rate hikes by the Federal Reserve (Fed). U.S. technology stocks have been the first to bear the brunt of corrections and corrections.

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In particular, the Philadelphia Semiconductor Index, which is closely linked to the Taiwan stock market, showed a sharp decline. In addition, TSMC's profit was exhausted after the legal meeting, dragging down the weighted index of Taiwan stocks to fall below the 48,000-point mark.

Looking further, Wei Yongxiang said that as the time series enters October, we can pay attention to the following variables: First, 11/3 is the U.S. midterm election. Past experience shows that U.S. stocks rose less or fell more in the month before the election. However, the U.S. stock market has performed well since late September. It remains to be seen whether the past inertia can be changed.

Second, starting from mid-October, the United States and Taiwan will simultaneously enter the financial report release period and intensive legal discussions. What is the outlook for leading AI companies such as Nvidia and Google from the fourth quarter of this year to next year? This will affect the direction of the legal circle’s prediction of AI supply chain profits in 2027; third, the subsequent trading trends of foreign investors in Taiwan stocks and whether U.S. bond yields will fall.

Investment institutions said that as the wave of AI investment continues and Taiwanese companies enjoy sustainable growth, the bullish pattern of Taiwanese stocks remains unchanged, and there is still a high chance of challenging new highs in the future. It is recommended to take advantage of sharp declines and bargain hunting to deploy Taiwanese stock ETFs in batches.

In addition, in terms of sector layout, two major directions can be noted, including: 1. Beneficiaries of improved AI infrastructure specifications such as foundries, test interfaces, heat dissipation, power supplies, copper foil substrates/PCBs, ABF carrier boards, optical communications, Netcom and other groups are the core holdings; 2. As large CSPs actively develop AI ASICs, the importance of self-developed chip supply chains will continue to increase. Related IC design services, advanced packaging and high-speed transmission technologies all have long-term growth potential and are also the focus of stock selection.

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