Benchmark plunges nearly 1,000 points as financials support the market
Hit by negative Google earnings, Taiwan stocks saw short-term selling pressure emerge on October 29, with electronics stocks sold off and the market plunging nearly 1,000 points intraday, with the largest drop reaching 980 points. 台積電 fell below 2,400 intraday and closed lower at 2415, while the加權指數 closed down 667 points at 46,368.
Financial holdings bucked the trend to support the market, becoming a source of support during the volatility. 元大MSCI金融 (0055) rose to 52.5, setting another record closing high. Amid the volatile market in October, 0055 posted a gain of over 6%, leading gold-containing ETFs in performance.
Capital gains contribute, earnings outlook looks strong
Recent strength in financial stocks mainly benefited from capital gains driven by the bull market, as well as tight funding pushing up interest spreads, boosting financial industry earnings, which are expected to challenge new highs. Looking at gold-containing ETF performance since October, 0055 led with a 6.6% gain, followed by 統一 Taiwan High Dividend Momentum (00939), Fuh Hwa FTSE High Dividend Low Volatility (00731), Yongfeng Preferred Deposit (00907), and Yuanta High Dividend Low Volatility (00713), with gains ranging from 4.7% to 5.7%, showing financial-related ETFs still demonstrated resilience during market volatility.
Up 64.3% this year, surpassing TAIEX total return
Extending the period to since the global stock rebound from the end of July, 0055 rose 17.5%, while the TAIEX total return including dividends was 7.9% over the same period. Year-to-date, 0055 is up 64.3%, also higher than the TAIEX total return including dividends of 62.7%, with the two showing a golden cross.
Institutional investors: Financial stocks become an important driver
Institutional analysis shows 0055 components cover major Taiwan financial holdings, allowing investors to capture core financial targets in one investment. The financial industry also benefited from the AI growth trend, driving proprietary investment gains, securities brokerage business, bank deposit and loan business, and fee income, so financial stocks are not merely a catch-up play on fund rotation, but are deeply participating in the market rally.
Institutions further pointed out that financial stocks have shifted from being seen as the last leg of a rally in the past to becoming an important force driving Taiwan stock market capitalization, with advantages including earnings support and reasonable valuations. With strong Taiwan GDP growth this year and expectations for the 2027 outlook still positive, the financial industry is expected to benefit from the economic upturn. Investors can pay attention to financial stock earnings performance and risk characteristics, and allocate assets through financial-related ETFs. Investing involves risks; please read the prospectus carefully before subscribing.