- The Taiwan Weighted Index TWSE:TAIEX surged during Monday's early trading, at one point soaring over 3% to 47,871.19 points, setting a new intraday record high. The heavyweight stock TSMC 2330:TT also jumped 3.73% to a new high of 2,500 New Taiwan dollars.
- U.S. stocks rebounded strongly last Thursday, led by the semiconductor sector, with the Nasdaq Composite Index rising 1.9% in a single day. Additionally, a temporary agreement between the U.S. and Iraq eased inflation concerns, boosting risk appetite in the Asia-Pacific tech-heavy markets.
- Despite the significant gains in Taiwan stocks this year, analysts point out that the market still has upward potential in the second half of the year, driven by fundamentals led by wafer foundry price increases, reinvestment during the dividend season, and valuation support. However, attention should be paid to the risks of high-level corrections triggered by the Federal Reserve's interest rate hike expectations and geopolitical tensions.
Tech Heavyweights Lead Market Surge, Wafer Foundry Leader's Valuation Reconstructed
The recent rise in Taiwan stocks is mainly boosted by the strong rebound in the U.S. tech sector last week. As a core part of the global semiconductor supply chain, TSMC showed a strong capital attraction effect in Monday's early trading, with its stock price reaching a historical high of 2,500 New Taiwan dollars.
Market analysis indicates that TSMC will hold an investor conference on July 16. With the gradual manifestation of the price increase effect, its gross margin is expected to further rise to the upper-middle range of 65% to 70%. If the annual earnings per share reach 100 to 105 New Taiwan dollars this year, the current price-to-earnings ratio remains relatively reasonable among tech growth stocks, providing solid support for the structural valuation reconstruction of the broader market.
Dividend Season Arrives, Domestic Capital and ETF Ecosystem Sustain Funding
In addition to strong fundamentals, abundant liquidity in the second half of the year is also an important variable driving the index. With the arrival of Taiwan's traditional dividend season, the market expects that a large proportion of funds will be reinvested in the stock market or used to subscribe to various index funds (ETFs) after receiving dividends from retail and institutional investors.
This domestic capital cycle effect is expected to push Taiwan's stock market's margin balance to a new historical high. With the dual resonance of retail funds and passive allocation funds, the overall market liquidity premium is unlikely to dissipate in the short term, laying the financial foundation for the index to challenge the 50,000-point mark in the second half of the year.
Interwoven Macro Variables, Potential Downsides and High-Level Profit-Taking Pressure Persist
Although the mainstream market sentiment remains optimistic, looking ahead, several external macro variables may still disrupt the high-level operation of Taiwan stocks. There is still a probability of a Federal Reserve interest rate hike by the end of this year, and the expectation of marginal tightening of global monetary policy has not been completely eliminated.
Meanwhile, potential geopolitical disturbances in the Middle East and the substantial profit-taking after Taiwan stocks hit new historical highs suggest that market marginal volatility may increase. If overseas macroeconomic environment fluctuations or core inflation data rebound, market pricing may face reevaluation, and investors should be wary of technical pullbacks and high-level fluctuations following short-term gains.
