Highlights

The Taiwan Stock Weighted Index plummeted by 510 points last week, marking two consecutive weeks of downward trend. A massive sell-off of 100 billion NTD on Friday's last session suggests year-end foreign institutional investors' program selling. Despite this, group accounting efforts ahead of the year-end could bring some strength amidst the weakness. The correction phase may not yet be over.

Sentiment Analysis

• The sentiment for Taiwan's stock market currently leans towards caution as the market grapples with a significant correction.
• 45%
• Uncertainty lingers with a high volume sell-off by foreign institutional investors, suggesting possible extended market corrections.
• However, there is a tempered optimism due to the anticipation of group accounting activities before the year-end.
• The index remains shy of a recovery point, pending further clarity in market conditions.

Article Text

Last week, the Taiwan Stock Weighted Index saw a sharp decline of 510 points, recording two consecutive weeks of losses. The massive sell-off, particularly on Friday's final trading session with 100 billion NTD in sales, was attributed to foreign institutional investors executing year-end program selling. This selling pressure is accentuated by local investors beginning to show signs of profit-taking, increasing concerns that the corrective phase of the market may not yet be over.

In the past week, foreign investors were net sellers of over 60 billion NTD in the main and OTC markets, notably shedding large stakes in companies like Hon Hai (2317-TW), Yang Ming (2609-TW), and Quanta (2382-TW), each facing considerable selling pressure. Conversely, despite this downward trend, foreign investors still showed interest in high-priced stocks and large-cap electronics, which might prevent the market from severe declines.

Shin Kong Securities pointed out that from the perspective of interest rate forecasts, the Federal Reserve might only cut rates twice next year. In a climate of muted market news and limited catalysts, the Weighted Index has fallen to its six-month trendline, indicating a bearish trend. The technical indicators such as daily KD continue downward, suggesting the correction phase could persist, with the need to watch if the previous low of 22,055 points holds.

From a capital standpoint, foreign investors seem to have squared positions ahead of the Christmas holidays. This shift in market atmosphere advises investors to remain observant and await a clearer market direction. According to Shin Kong Securities, this week is a gap period for financial reports and economic data, coupled with the foreign holidays. Additionally, the anticipation of new U.S. President Trump's inauguration on January 20th adds to the market's uncertainties, with rumors of 25 executive orders being issued on his first day posing potential volatility.

Key Insights Table