Falling Below 40,000 Points, Weekly Plunge Exceeds 10%
Affected by the sharp sell-off in U.S. stocks, Taiwan stocks opened lower last Friday, falling below 40000 points to an intraday low of 37837.05 points. Losses narrowed into the close as the index rebounded by more than 2000 points, ending down 1873.08 points at 39701.64 points on turnover of 1.31 trillion yuan. For the week, the index tumbled 5510 points, or 12.19%. The National Stabilization Fund launched market stabilization operations, while the FSC also imposed short-selling curbs. Looking ahead, institutional investors believe AI supply chain-related companies face elevated short-term valuation pressure, but this does not signal a change in the AI development trend, with fundamentals intact. After selling pressure is digested, the market is expected to stabilize in volatile trading.
Correction Reflects Policy Uncertainty and Valuation Pressure
Allianz Taiwan Mobile Dam Fund and Allianz Taiwan Technology Fund manager Hsiao Hui-chung said that after the U.S. midterm elections, market concerns that the Democratic Party would tighten regulation of AI and data centers triggered a sharp sell-off in U.S. stocks, with technology-heavy Nasdaq and Philadelphia Semiconductor indices falling more steeply. Affected by this, Asian stock markets saw panic-driven sentiment, with sharp volatility in Japanese, South Korean and Taiwan equities.
Hsiao Hui-chung said that although the Democratic Party holds a tougher regulatory stance toward data center construction and AI development, there remains much room for discussion over actual implementation. Ongoing data center construction mainly faces the challenge of rising costs, but this will not force tech giants to slow investment. At a preliminary view, considering tight supply bottlenecks, the impact on related supply chains is relatively limited, with strong investment demand remaining the main driver of growth. Overall, the correction mainly reflects policy uncertainty, valuation adjustment and fund repositioning, but short-term market sentiment remains cautious and fund momentum is weak, so volatility may remain elevated.
Focus on Semiconductor and AI Supply Chain Leaders
Hsiao Hui-chung said Taiwan's key position in the AI supply chain remains unchanged, and corporate earnings remain the key factor for the medium- to long-term market, with strong corporate earnings growth momentum still expected in 2027. In the short term, market sentiment and selling pressure need time to settle, while the medium- to long-term outlook for AI supply chain earnings momentum remains positive. Strategically, the focus remains on technology, centered on semiconductors and the AI supply chain, with timely fine-tuning, prioritizing large-cap leaders with solid results and industry-leading positions, and adjusting positions based on fundamental figures, with continued optimism on IP, ASIC, advanced process packaging and testing, PCB, CCL supply chains, AI server components and optical communications.
00984A Allianz Taiwan High-Dividend Growth Active ETF fund manager Liao Ben-long said some growth industries had posted large prior gains with valuations pushed higher, market and industry divergence will become more pronounced, making stock selection and diversified allocation more important. The current portfolio has financial holdings as its largest sector allocation, with growth exposure covering semiconductor foundry, advanced packaging, memory, IC design, semiconductor equipment, PCB, industrial PCs and thermal solutions. 00993A Allianz Taiwan Active ETF fund manager Kuo Chin-fu said the Federal Reserve's interest rate policy, U.S. long-term bond yields, and the impact of geopolitics on oil prices and inflation remain the main variables ahead, with funds focusing more on AI-related companies with higher revenue and EPS growth visibility, as the market shifts from a broad rally to industry- and stock-specific divergence.