Ahead of the Federal Reserve decision, Taiwan stocks surge; TSMC leads with 1505 yuan. How to sustain the 28,400-point mark?

As the Federal Reserve approaches, the Taiwan stock market demonstrates remarkable resilience. The Weighted Index closed today up 218.13 points at 28,400.73, a gain of 0.77%, with a trading volume of NT$492.18 billion, and market enthusiasm remains high. The main driver of this rally is none other than TSMC (2330). After touching NT$1500 yesterday but failing to stabilize, today it surged to NT$1505, up NT$25, closing at the day’s high, with a trading volume of about 23,000 lots, a single-day increase of 1.69%.

TSMC’s Earnings Surpass Expectations, Performance Outlook Determines Market Trend

TSMC’s role as the market savior hinges on its November revenue exceeding expectations. Consolidated revenue reached NT$343.614 billion, a slight decrease of 6.5% from the previous month but a 24.5% year-over-year increase, setting a new record for the same period. Cumulative revenue for the first 11 months has surpassed NT$3.4 trillion, rewriting historical achievements.

Driven by continuous explosive demand for AI, institutional investors are generally optimistic about TSMC’s Q4 performance, believing it not only has the chance to surpass high financial estimates but also to approach the goal of breaking NT$1 trillion in quarterly revenue. This solid fundamental supports the stock price to break higher and provides important backing for the overall Taiwan stock market.

Electronic Blue Chips Power Up Collectively, Rotation Effect Boosts Sub-Sectors

In addition to TSMC taking the lead, MediaTek (2454) surged NT$40 to NT$1460, a gain of 2.82%; leading semiconductor packaging and testing company ASE Technology Holding (3711) also rose nearly 2%. The steady performance of blue-chip stocks creates conditions for the index to recover all moving averages.

However, capital has not entirely stayed in the leading stocks. Some AI-related stocks like Hon Hai (2317) and Quanta Computer (2382) experienced slight pullbacks, reflecting a rotation strategy in the market. Notably, the “million-dollar” stock group remains active, with network communication giant Zhi Bang (2345) hitting the daily limit-up at NT$1090 during trading and remaining there until the close, re-entering the “Million-Dollar Club,” demonstrating the continued vitality of high-priced stocks.

Thematic Stocks Blooming, Silicon Photonics and Optical Lens Concept Stocks Attract Attention

While blue chips stabilize the market, funds are actively positioning in growth-oriented thematic stocks. Despite some silicon photonics stocks being designated as disposal stocks, their rally shows no signs of waning. Zundar-KY (4977) surged nearly 9%, and Rorwei (3163) jumped over 6%.

Meanwhile, optical lens concept stocks and PCB groups also attract investor interest. PCB manufacturer Jinhui (8358), after the disposal period ended, saw renewed buying interest, with the stock hitting the daily limit at NT$279, setting a new all-time high and becoming another focus of the market. These sensitive sectors reflect optimistic market expectations for future technological demand.

Technical and Fundamental Support, Fed Decision Becomes a Variable for the Market

From a technical perspective, Taiwan stocks show a bullish alignment of moving averages, with trading volume rebounding above the 5-day and 20-day averages, creating conditions for continued consolidation. Looking ahead, KGI Securities believes the index could rally toward previous highs after some consolidation; Guo Piao Securities points out that with expectations of rate cuts in December and a dovish Fed Chair possibly taking office, a weakening US dollar and a rising New Taiwan dollar will strengthen foreign capital and provide liquidity support.

The market generally expects the Fed to initiate further rate cuts. The frontrunner for the next chair, Harker, has indicated ample room for rate cuts. This easing expectation creates a favorable environment for global stock markets. Overall, Taiwan stocks, supported by strong earnings from leading companies and ample global liquidity, despite short-term impacts from Fed statements and Chairman Powell’s remarks, are still poised to challenge the all-time high of 28,554 points if the trend remains unchanged. Investors should closely monitor the Fed’s guidance on next year’s interest rate path and foreign capital movements.