Taiwan Stocks Fall 5510 Points in a Week, Lose 40000-Point Mark
Taiwan stocks plunged 5510 points last week, falling below the 40000-point mark, with the National Stabilization Fund and short-selling curbs rarely deployed in tandem. Market attention is on whether the opening this week can stage an oversold rebound. Huang Wen-ching, chief strategist at Taishin Investment Advisory, said in an interview with NOWNEWS on November 8 that Taiwan stocks have a chance to build an oversold rebound after bottoming, but replicating the rapid recovery and new high after the sharp fall in July, or even challenging 50000 points, is unlikely in the short term.
From its record high to now, Taiwan stocks have fallen more than 10000 points, and need time to digest and settle chips. Margin financing fell by more than 40 billion last Friday, a very significant amount, with the pace of margin deleveraging gradually catching up with the market decline. Coupled with stabilizing and rebounding U.S. stocks, it shows the previous major negative news has been largely digested. The focus will return to fundamental changes, and a V-shaped reversal should not be expected immediately.
Margin Deleveraging to Determine Rebound Height
As for how far the rebound can go, Huang believes the key lies in the degree of margin deleveraging. The current reduction in margin balances has gradually caught up with the market decline, and if floating shares can be further washed out during the rebound, the structure will be healthier. Based on a decline of more than 10000 points from the high, a one-third retracement should be no problem, returning to around 43000 points. Whether it can return half of the decline or even higher will depend on the degree of margin deleveraging.
On concerns that forced margin-call selling pressure remains at this week's open, Huang believes this would instead help wash out floating shares, especially amid rebounding U.S. stocks and buying by the National Stabilization Fund, which can effectively absorb floating chips. If chips shift from retail floating shares to the National Stabilization Fund, large investors and institutional investors, it will be more favorable for market stability.
Concerns Over Delayed AI Investment Remain
On market doubts about AI development after the U.S. midterm elections, Huang noted the focus is on whether investment in AI data center construction will slow. It is not that AI demand has declined, but that investment may be delayed, and the situation is not as pessimistic as the market imagines, though time is needed for observation. Some U.S. governors who could hinder AI development will not take office until January next year, leaving many variables, and the market may fall back into consolidation after the oversold rebound.
On talk that the rebound is just a dead-cat bounce, Huang said the market has not yet turned into a formal bear market. It is just that Taiwan stocks previously rose sharply and need to rest and consolidate, and the AI development trend has not changed, only slowed, shifting from a fast bull to a slow bull.
Dual Support Measures Aim to Defend 43000 Points
On the government's simultaneous rollout of short-selling curbs and National Stabilization Fund support, Huang believes the two-pronged move helps improve the support effect. The short-selling curbs can suppress short sellers, especially foreign short positions, and combined with rebounding U.S. stocks, margin deleveraging, and the National Stabilization Fund stepping in to absorb floating shares, the chip outlook should improve. The National Stabilization Fund's mostly successful track record in past interventions is also a source of market confidence.
As for whether a new high or 50000 points can be challenged before year-end, Huang believes it is very difficult. With limited time left before year-end, plus floating shares still to be washed out, Taiwan stocks still need time to consolidate. Investors should watch chip settlement and fundamental changes, and respond cautiously to volatility risks.