After the Taiwan stock market hit a record high of 49,968 points in early October, the index immediately showed a downward retracement, falling below the quarterly line, the half-year line, and even directly testing the annual line. Legal experts believe that after the National Security Fund and the short-term ban were both issued to protect the market, it is recommended that investors avoid chasing highs and selling lows. The focus of Taiwanese stocks is the release of the quarterly report, and grasping the "quality when falling" can be verified by numbers, and positioning high-quality companies at dips.
The Schroders Taiwan stock investment team said that in the short term, the election results will have an overwhelmingly negative interpretation of the valuation of technology stocks, but the actual situation is likely to be smaller than the market imagined, because the core that determines the development speed of the AI industry is still corporate profits and AI demand, and whether applications continue to grow and progress, rather than political party rotation itself.
Furthermore, past experience shows that the U.S. midterm elections have limited impact on Taiwan stock market fluctuations. Even after the post-election uncertainty is eliminated, the market has a high chance of rising. Therefore, Taiwanese stocks will face a style shift in the future. Price-rising concept stocks that were in short supply due to rising general demand in the first half of the year will hand over to stocks that benefit from increased specifications that drive an increase in unit computing power.
Kuo Xiucheng, head of the quantitative investment department of UOB Investment Trust Index, said that Taiwan’s key position in the global AI supply chain has not changed. From advanced manufacturing processes, CoWoS advanced packaging, AI servers, ASIC customized chips, optical communications to high-speed transmission and other fields, Taiwanese companies still have the most important technological and production capacity advantages in the world.
He pointed out that when the AI industry enters the commercialization stage from the construction stage, companies' demand for computing power and infrastructure will continue to increase, and Taiwan's supply chain is still expected to continue to benefit. Although the short-term market may be affected by sentiment and foreign investment adjustments, with the support of corporate profits and industry trends, the outlook for the Taiwan stock market remains neutral to bullish.
KGI Investments said that short-term political uncertainty will indeed depress valuations. In particular, AI data centers involve huge capital expenditures, as well as complex issues such as land, electricity, water resources and local communities. The power reorganization brought about by elections is often accompanied by regulatory reviews, environmental standards and re-evaluation of financial resource allocation. Market fluctuations are expected to continue. However, policies may change the construction speed, but the computing power demand for AI development will not disappear. Investors do not need to panic excessively due to the huge single-day drop in the index.
