Taiwan stocks close above the 28K mark! Foreign investors unleash full force with a net buy of 19.1 billion, signaling the start of year-end accounting rally

Foreign institutional investors team up with fund managers and proprietary traders, with three major institutional players net buying NT$19.117 billion in a single day, hitting a recent high

The Federal Reserve (Fed) has a 96% chance of cutting interest rates in December. As expectations for the end of the rate hike cycle continue to ferment, the Taiwan stock market today experienced a strong rebound. The combined net buy by the three major institutional investors reached NT$19.117 billion, the highest in recent days, driving the weighted index to close at 28,303.78 points, up 1.15%, an increase of 322.89 points. Trading volume also expanded to NT$424.744 billion, officially bringing the Taiwan stock market back above and consolidating the 28K level.

Among them, foreign investors are the main force, with a net purchase of NT$14.088 billion in a single day, continuing a four-day buying streak, with a total net inflow of NT$36.8 billion this week; fund managers shifted their focus to financial stocks, with a net buy of NT$1.029 billion; proprietary traders jumped on the theme, with a net buy of NT$4 billion. The eight major state-owned banks sold slightly NT$2 billion, reflecting a solid consensus among bullish investors.

Capital rotation accelerates, Asian financial and value stocks become new favorites

Market observations indicate that the deep driving force behind this wave of buying is a rebalancing of global capital allocation. As high-valuation US tech stocks face profit pressure, foreign investors are beginning to withdraw from AI technology stocks and shift toward Asian financial and value stocks. The Nikkei 225 index rose 1.2% to 39,800 points, South Korea’s KOSPI increased 0.8% to 2,650 points, China’s Shanghai Composite rose 0.3% to 3,150 points, and India’s Nifty 50 gained 0.9% to 24,200 points. The entire Asian stock market shows a pattern of more gains than losses.

Foreign investors have net inflows of over US$15 billion this week, with India and Vietnam each attracting US$2 billion, benefiting from 6-7% GDP growth and supply chain transfer effects; Japanese bank stocks surged as much as 2.5%, highlighting that undervalued financial stocks (with yields over 5%) are becoming new focal points for capital, signaling a strategic shift from high-valuation tech bubbles to value investing.

Semiconductors lead a surge in limit-up stocks, TSMC’s contribution to the index exceeds 200 points

Internal sector rotation in Taiwan stocks is particularly evident. The semiconductor index surged 2.31%, with five stocks—Wanghong, Macronix, VSE, Silicon Integrated Systems, and Huadong—hitting the daily limit. Nanya Technology rose 6.86% to NT$163.5, driven by a 15% increase in DRAM and NAND prices and inventory replenishment demand; glass stocks led gains with a 4.22% increase, with Taiwan Glass up 4.8% to NT$38.2 and Fuh Ming Technology up 7.73%. PCB stocks continued their hot streak, with Unimicron up 4.8%, reflecting strong AI server orders and a recovery in the global electronics supply chain.

In terms of blue-chip stocks, TSMC rose 2.4% to NT$1,495 (up NT$35), contributing over 200 points to the index. Hon Hai and MediaTek increased 0.43% and 1.05%, respectively, maintaining steady gains. The financial sector rose 0.28%, with Fubon Financial and Taishin Financial both up over 2%, benefiting from the New Taiwan dollar appreciating to NT$31.25, reducing currency exchange costs.

Technical outlook turns stronger but risk signals emerge, 15 stocks with cancellation rates of 30-50%

From a technical perspective, Taiwan stocks’ RSI has risen to the 68 range, entering a bullish state, with support at 28,000 points and short-term resistance at 28,500 points. Fund institutions predict that, following the historical average increase of 4-6% in December, the year-end profit-taking rally may continue, with the 28,500 level within reach.

However, concerns are also emerging. The Taiwan Stock Exchange has identified 15 stocks to watch, including Nanya Technology, Macronix, Unimicron, Taiwan Glass, and others in the semiconductor, PCB, and transportation sectors. These stocks have experienced excessive gains and abnormal trading, with cancellation ratios reaching 30-50%, indicating increased risks of main force manipulation and short-term short covering. Experts warn that the year-end profit-taking atmosphere may tempt retail investors to chase highs, and events like the August 2024 Taiwan index futures limit-down could repeat.

Investment advice: Reduce positions on rallies, focus on fundamentally solid stocks

PGIM Prudential analyst Liao Bingkun stated that the traditional peak season in December, combined with the ongoing AI profit momentum, has pushed Taiwan’s market capitalization to NT$82.5 trillion, with trading volume expected to rebound to NT$4.5 trillion. However, Fubon Securities Chairman Chen Yiguang reminded that if the upcoming Fed meeting data exceeds expectations (such as core PCE inflation heating up), it could trigger profit-taking. Investors should closely monitor tonight’s US economic data and the Fed’s decision in the coming days.

Moore Securities analyst Xie Wen’en advised investors to reduce positions on rallies, shift focus to fundamentally solid financial and blue-chip stocks like Fubon Financial and TSMC, with stop-loss settings within 5%. Diversify holdings and track Fed meeting results to balance optimism and caution, enabling investors to seize the year-end market’s final stage without getting caught or chased into losses.