High EPS Growth for Two Straight Years, Market Outlook Remains Optimistic
2026 and 2027 Taiwan stock EPS growth is estimated at as high as 67.2% and 29.7% respectively, and the outlook for Taiwan stocks remains optimistic. Taiwan stock first-half earnings reports and investor conferences generally beat expectations, the market continues to revise up EPS growth for 2026 and 2027, and sharp short-term pullbacks are all buying opportunities. However, 2027 EPS growth will slow compared with 2026, which means index returns next year may not be like this year. Investment style will shift from Beta to Alpha, and it will be the era for small- and mid-cap niche stocks to perform.
Rising Inflation Drags Taiwan Stocks Below 47,000 Points
Shen Jianhong, manager of the Taishin Taiwan Small- and Mid-Cap Active ETF Fund (00416A), said that as tensions in the Middle East intensified again, Brent crude futures recently topped 100 US dollars per barrel. The newly released US September consumer price index annual rate rose from 3.4% in August to 3.7%, above the market expectation of 3.6%, sharply raising market expectations for a Federal Reserve rate hike in October, hitting the four major US stock indices sharply lower and also dragging Taiwan stocks below the 47,000-point mark.
Volatile Range Expected in October-November, Focus on Individual Stocks
As the prior Taiwan stock rebound exceeded 4,000 points, with margin balances approaching the prior high and returning to above 6,300億元, chips need to settle after the rally and chasing momentum may weaken. Volatility is therefore expected to continue in October-November, focusing on individual stock performance, with small-cap stocks with niche themes having relatively more room to perform. The first Taiwan small- and mid-cap active ETF, the Taishin Taiwan Small- and Mid-Cap Active ETF Fund (00416A), was approved for establishment on 1014, capturing the long-term major rally.
AI Supply Chain Small-Cap Stocks Show Strong Earnings Growth
Shen Jianhong pointed out that corporate earnings growth is often the weathervane for stock market gains, and companies with higher earnings growth also enjoy higher price-to-earnings valuations. Taiwan small- and mid-cap stocks with AI supply chain advantages have strong earnings growth, and their share price explosiveness over the past three years has far surpassed the broader market and heavyweight stocks. The top 30 gainers in Taiwan stocks over the past three years were all stocks with capital of less than 8 billion, such as Qihong, Elite Material, MPI, Taiwan Union Technology and others. The era of across-the-board AI gains is over, industries will diverge going forward, and with higher bases, growth will be不如the early development stage, making selective stock picking by managers even more necessary. Investors allocating to Taiwan small- and mid-cap active ETFs can improve their odds. Investment always involves risks, funds have gains and losses, investors should read the prospectus carefully before subscribing, prudently assess risks, and be responsible for their own investment results.