The Taiwan Stock Exchange's weighted index experienced a setback last week, plummeting by 520 points to close at 22,302, thus halting its three-week upward trend. This downturn was largely attributed to foreign investors offloading stocks worth 72 billion NTD in the centralized market. As we approach the National Day holiday, the market is bracing for a flurry of earnings announcements from both listed and over-the-counter companies. Analysts suggest that this wave of disclosures could facilitate sector rotation, bolstering individual stocks and gradually raising the market's floor during its consolidation phase, which is especially crucial given the uncertain international environment in October.

Despite disruptions caused by typhoon-related trading halts on two days, foreign investors showed no signs of slowing their sell-off activities. Leading the charge was TSMC (2330-TW), with a net sell of 15.2 billion NTD, followed closely by Evergreen Marine (2603-TW) at 5.1 billion NTD. Other notable sales included Quanta Computer (2382-TW) and MediaTek (2454-TW), each hovering around 4 billion NTD, while Delta Electronics (2308-TW) saw a net sell of nearly 3 billion NTD. Yang Ming Marine (2609-TW) and Wan Hai Lines (2615-TW) experienced outflows near 2.5 billion NTD each, with United Microelectronics Corporation (UMC, 2303-TW) also surpassing 2 billion NTD in sell-off.

Conversely, foreign capital inflows were prominently directed towards Hon Hai Precision Industry (2317-TW), which saw the highest net purchase of 2.828 billion NTD. Following Hon Hai were investments in Yuanta Investment Grade Bond (00724B-TW) with 2.7 billion NTD and Fubon Financial Investment Grade Bond (00785B-TW) close to 2.5 billion NTD. China Steel (2002-TW), as well as Cyrix *-KY (6415-TW), benefited from foreign interest with net purchases exceeding 1.5 billion NTD each.

Amidst the volatile geopolitical climate in the Middle East, foreign investors are strategically reallocating funds away from heavyweight electronics stocks. With the intensifying U.S. presidential election and an overall unpredictable global landscape, market participants are advised to consider a long-term approach. As the U.S. embarks on a potential rate-cutting cycle, some view it as an opportunity to build medium to long-term positions during market dips. Short-term traders, however, might focus on rapid, tactical plays.

SinoPac Securities suggests that the recent market pullback is more of a technical correction. Following a steady rise from a September low, the Taiwan Stock Market not only overcame seasonal resistance but also surpassed August highs. The base continues to elevate, forming an upward trajectory. As long as the market maintains levels around 22,000 points, the positive trend should persist.

Simultaneously, companies are in the process of releasing their September and third-quarter earnings reports. The spotlight is particularly on tech stocks, which have faced varied evaluations post-adjustment in the third quarter. The market demands empirical validation regarding demand strength. For instance, Jensen Huang's assertions concerning Blackwell could reignite interest in AI provided they are substantiated with supply chain revenue data. Such validation can help identify resilient stocks within the industry.

On another note, China's efforts to stabilize the economy through liberal policy measures are acting as a stimulant. Investors might find promising opportunities in Chinese domestic demand stocks, such as aesthetic medicine, contact lenses, and dining sectors, if the companies involved have a substantial presence in China.

In conclusion, as Taiwan's market navigates through this complex period marked by earnings releases and global uncertainties, strategic positioning remains paramount. The unfolding developments not only set the stage for potential sectoral shifts but also influence the broader market trajectory, emphasizing the need for both vigilance and agility among investors.

Last edited at：2024/12/16