■Lu Zhongda
The Taiwanese stock market experienced a very violent "squat first and then jump" in July and August: in July, it plummeted due to the large-scale withdrawal of foreign capital. In just a few weeks, the share prices of most of the previous strong stocks were halved, and on July 17, they hit the largest drop in history. In August, they rebounded strongly, driven by strong fundamentals and the theme of AI. The main reason was that Huida's financial report reflected the continued prosperity of the AI boom, and the theme of the semiconductor exhibition attracted foreign investment to cover up.
Taiwan stocks hit the biggest drop in history in July, rebounded strongly in August on AI and semiconductor themes
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The reasons for the ups and downs of the Taiwan stock market include the US-Iran military conflict that has driven up international oil prices, high interest rates that may last longer and drag down technology stocks, concerns about the AI bubble, and valuation revisions that have seen excessive gains. Among them, we believe that the most important reason is that high interest rates will last longer and cause greater psychological pressure on the market. Therefore, the future trend of Taiwan stocks will still have to focus on the monetary policy of the U.S. Federal Reserve. Chairman Washer regards "controlling inflation" as the primary goal and emphasized that if inflation does not cool down significantly, the Fed "still has work to do."
As Huida's eye-catching financial report confirmed the strong demand for AI, coupled with the fermentation of the theme of the International Semiconductor Exhibition, market fundamental confidence has recovered, attracting foreign investment to return and massive replenishment, driving the market to launch a retaliatory rebound. (European News Agency)
At present, U.S. inflation is relatively sticky, with the core PCE annual growth rate still as high as 3.7% in July. The August employment data, which was higher than expected, also increases the possibility of raising interest rates. CME FedWatch on September 7 showed that the probability of keeping interest rates unchanged at the September 16 meeting was 41.7%, which was highly conflicting with expectations for interest rate hikes. It is the most uncertain meeting in recent years.
The war in Iran affects the Federal Reserve, Taiwan stocks increase 9-10% year-on-year, exports serve as protective shields
The inflation situation still depends on the situation in the Middle East. The war in Iran, which started at the end of February, has entered its seventh month. So far, there is still uncertainty about whether the blockade of the Strait of Hormuz, a key energy waterway, will be alleviated. Based on the above, the Federal Reserve’s monetary policy and geopolitical risks are the two major variables in September. The positive factor is that Taiwan's fundamentals are very good, exports and foreign sales orders are strong, and the full-year forecast is between 9-10%.
Taiwan stocks usher in the traditional peak season for electronics in September, with box-shaped shocks to digest selling pressure and gain momentum in the fourth quarter
Furthermore, the long-term growth trend of the AI industry remains unchanged, which is beneficial to the supply chain of Taiwanese manufacturers; September has also entered the traditional peak season for the electronics industry; listed companies are expected to grow by nearly 70% this year and nearly 30% next year. As the most severe time has passed, September is judged to be a box-shaped shock. Due to the heavy selling pressure caused by high-end holdings in the previous wave, it will take time to digest. However, it is expected to usher in a turning point and gradually move in an optimistic direction. With the support of strong fundamentals, if the international political and economic situation stabilizes, there is a chance that it will continue to rise in the fourth quarter. In terms of operation, it is recommended to closely track changes in U.S. bond yields and trading volume, control capital levels, enter and exit in batches, and strictly abide by the discipline of stop loss and profit stop.
(The author is the professional vice president of Uni-President Securities Company)
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