Yuantai Predicts Taiwan Stock Highs in 2025 and the Role of External Variables

Preface

Yuantai Financial Group recently held its 2025 Investment Outlook Conference on the 19th, projecting that the Taiwan stock index could reach a high of 26,500 points in 2025. This peak might occur in the first or fourth quarter, contingent upon several external factors such as a trade war 2.0 and the potential for another Trump era. However, the index's low could dip to around 21,500 points, and there is a possibility of testing the annual line. Yuantai explains that these index trends are shaped by factors like Taiwan Semiconductor Manufacturing Company's (TSMC) 2nm production and fluctuating U.S. tech stock dynamics.

Yuantai further elaborates that the most significant changes next year include new tariffs from the U.S. government, geopolitical shifts, the effectiveness of China's economic policies, and how the strength of the dollar influences fund flows in emerging markets. The Taiwan index is closely linked with the Philadelphia Semiconductor Index and Nvidia stock prices, reflecting global semiconductor growth and changes in end-market inventories. In 2023, Taiwan's weighted index climbed by 27.3%, with market-cap ETFs outperforming others, despite many sectors lagging the index, particularly those connected to China. This trend of distinctive individual stock performances is expected to persist next year.

In 2025, attention must be paid to significant events, including:

1. The IPO process of OpenAI, potentially sparking a renewed AI craze. OpenAI has opted to collaborate with Broadcom instead of building its own wafer factory, choosing TSMC for AI chip production.

2. The Financial Supervisory Commission will open the market for active ETFs, with Taiwan's first active ETF anticipated to list next year.

3. The impact of policy cannot be underestimated, with Sino-American political and economic confrontations influencing cross-strait relations.

Throughout this dynamic environment, stakeholders should maintain vigilance regarding the aforementioned variables, while also recognizing opportunities that might arise from these geopolitical and market fluctuations.

Lazy bag

Overall, Yuantai predicts that Taiwan's stock market in 2025 will see significant highs and lows. Factors such as TSMC's 2nm production, potential U.S. tech stock drops, and foreign investors' actions will play critical roles. Investors are advised to watch for geopolitical changes and U.S. policy shifts that could influence market dynamics, while remaining cautiously optimistic about potential opportunities linked to developments like AI and active ETFs.