Volatile Taiex at High Levels as Foreign Investors Withdraw Sharply
In 2026, Taiwan stocks benefited from the artificial intelligence theme, successively breaking above the 30,000-point and 40,000-point marks during the year and at one point heading toward 50,000 points. Recently, doubts emerged over the payoff from huge AI investments, and with the U.S. Democratic Party scoring a sweeping victory in the midterm elections, investors worried the AI industry could face stricter regulation, triggering selling pressure in global tech stocks; on the 6th, Taiex plunged as much as 3737.67 points intraday, setting the largest intraday drop on record. On October 15, foreign investors net sold 3025.55 billion yuan of Taiwan stocks in a single day, Taiex closed down 1655.96 points, and total turnover in the Taipei and E Ink foreign exchange markets reached US$9.115 billion, a record high volume, surpassing the US$5.561 billion seen in March 2008 on the celebratory rally after Ma Ying-jeou was elected president. In 2026 alone, 7 trading days ranked among the top ten trading-volume days in Taiwan-wide history for large-transaction volume, with the FX market entering a new era of huge volumes.
Diverging Taiwan-Korea Exchange Rates as Repatriation Momentum Differs
Through the end of October this year, the NT dollar had cumulatively depreciated 3.2%, briefly breaking below the NT$33 mark this week and ranking weakest among Asian currencies; over the same period, the Korean won appreciated 8.38%. Cathay United Bank chief economist Lin Chi-chao analyzed that Taiwan and Korea both benefited from the AI boom, but Korea has three supports, including strong earnings by memory makers such as Samsung and SK Hynix and expanded domestic capital expenditure driving repatriation of overseas funds, continued foreign net buying of Korean bonds, and market expectations that the Bank of Korea will keep raising rates. By contrast, although Taiwan posted record-high semiconductor exports and trade and current-account surpluses, a larger trade surplus has been accompanied by a smaller repatriation ratio, with tech giants expanding overseas investment reducing funds brought home. Central bank Governor Yang Chin-long previously said in the Legislative Yuan that large Korean companies are actively raising funds through overseas capital markets, supporting cross-border fund flows, while Taiwan's long-term stable economy, financial markets and exchange rate have led foreign investors to take heavier positions in Taiwan stocks.
Foreign Holdings Near 3x Reserves, Raising Difficulty of Stabilizing FX
According to central bank statistics, at end-September foreign holdings of domestic stocks and bonds at market value, together with NT dollar deposit balances, totaled the equivalent of US$1.9272 trillion, about 321% of forex reserves, also a record high; at end-October, amid Taiex volatility, the figure fell to US$1.7426 trillion, still equivalent to 292% of forex reserves. Lin Chi-chao noted that as Taiex moved from 30,000 points toward 50,000 points, the foreign shareholding ratio rose from about 43% to nearly 50% at one point, so even a small adjustment now involves far larger amounts than before. The central bank has recently intervened intraday, set prices into the close, managed dollar supply and demand through state-owned banks, and relaxed exporters' daily settlement limits to guide exporters to sell foreign exchange. Interbank traders said the central bank mainly provides liquidity to slow one-way volatility rather than defending a specific level, and when the NT dollar fell to near NT$33, exporter selling was sizable. Lin reminded that the AI story will not end this year, and if concerns fade and foreign capital returns, the NT dollar could swing from sharp depreciation to sharp appreciation, making the stabilization challenge even greater.