Record Intraday Plunge Then Narrows
Taiwan stocks saw violent intraday swings on the 6th, crashing over 3700 points in early trading to a low of 37837.05, marking the largest intraday point drop on record. Losses later narrowed to within 2000 points, with trading repeatedly testing the 40,000 integer level as the market sought to hold that key psychological line, with whether it can hold still to be seen.
Margin Washout Key to Stabilization
Taishin Investment Advisory chief strategist Huang Wen-ching noted that whether Taiwan stocks can truly stop falling and stabilize depends on whether margin positions are effectively washed out. Taiwan stocks have pulled back from a high near 50,000 to today's low, with the decline exceeding 20% calculated below 40,000. Based on historical experience, the decline often narrows in the final stage of a plunge, but during this drop margins do not appear fully cleaned out, with retail investors still expecting a rebound, which is unfavorable, and it remains to be seen whether today's sharp fall can wash out unstable positions to favor a deep oversold rebound.
Fast Bull Turns to Slow Bull, AI Still Top Pick
Huang Wen-ching analyzed that since the start of this year Taiwan stocks have been in a fast-bull market with strongly surging index and individual stocks. Recently affected by evolving U.S. political developments, the market assesses that data center buildout may slow and shipments may be slightly delayed, but that does not mean AI demand has disappeared, only that large cloud service providers still need further negotiation on reviews and grid equipment upgrade costs, with the market's long-term bullish structure unchanged, though the pace may shift from a fast bull to a choppy, drawn-out slow-bull pattern.
On strategy, Huang Wen-ching suggested short-term range trading amid violent swings, while medium- to long-term investors can buy in batches as sectors fall deeply, with deep-value buying still led by AI names, from upstream semiconductors and midstream components to downstream servers, where the medium- to long-term industry trend remains clear. On whether the government will intervene, he believes the decline has reached the threshold for regulators' attention, expecting the Financial Supervisory Commission may act through confidence-boosting statements, short-selling restrictions, or state-owned banks stepping in to stabilize the market, while whether the National Stabilization Fund will intervene still depends on spontaneous buying strength and the government's overall assessment.