Highlights

The week was marked by significant volatility in global markets, with Taiwan's stocks experiencing a sharp drop after hitting a historic high. This dramatic fall raises questions about the future of the current bull market. The sell-off was influenced by both profit-taking and settlement pressures. Additionally, geopolitical tensions and central bank policies added to market uncertainties, keeping investors on high alert.

Sentiment Analysis

• Investors are cautious, reflecting a mixed sentiment as they navigate through market uncertainties.
• 60%
  The sentiment indicates a cautious approach amid the recent market fluctuations and geopolitical tensions.
• Despite setbacks, certain sectors hold potential for recovery.

Article Text

This week, the Taiwan stock market staged a classic 'rise and fall,' reaching new heights before plummeting under heavy selling pressures. The benchmark index struck a record 24,551 points before tanking, driven by the dual pressures of futures settlements and profit-taking. The dramatic drop saw trading volumes soar past NT$570 billion, marking the tenth steepest decline in history. This sudden downturn particularly affected previously strong sectors such as the PCB and glass fiber industries, with stocks like Fuqiang and Taibo facing significant pullbacks.

The volatility wasn't confined to Taiwan. Globally, markets also experienced significant perturbations. Within the Federal Open Market Committee (FOMC), debates over potential rate cuts in September remained unresolved, with predictions slipping from 90% to 70%. At the same time, escalating conflict between Russia and Ukraine, with Russia launching drone attacks as peace talks seemed within reach, compounded investors' fears. Under these conditions, key tech stocks such as NVIDIA led the decline, reflecting heightened risk-aversion across markets.

Given the current scenario, investors are encouraged to adopt a cautious outlook, aligning with the trend of capital flowing out from high-value sectors. There’s a suggestion to re-evaluate portfolios, focusing on stocks that are trading at relatively low price-to-earnings ratios or those imbued with promising new themes or value opportunities. Emerging themes like the 'AI Glasses' supply chain or the cyclic 'panel stocks' which show recovery potential despite being down could, in fact, prove to be attractive rotation opportunities.

The macroeconomic environment also presents challenges. Inflationary pressures persist globally with central banks maintaining a hawkish tone. Economic data from major economies revealed inflation is still a significant issue, with some countries even showing acceleration signs.

In the U.S., retail and consumer confidence presented contradictory signals. While retail sales data remained strong, boosted by automotive and household goods sectors, the consumer sentiment index told a different story. With initial estimates stumbling at 58.6, far below expectations, inflation concerns appear to strain consumer confidence.

Meanwhile, corporate earnings in Q2 showed resilience, particularly in the U.S., with companies effectively mitigating tariff pressures. Goldman Sachs analysts reported a significant earnings per share increase, signaling successful strategic adjustments by corporations facing such challenges.

Key Insights Table

Aspect	Description
Market Volatility	Significant market swings with Taiwan stocks plunging post-record highs.
Geo-political Impact	Russia-Ukraine tensions and central bank policies add layers of uncertainty.
Investor Sentiment	Caution as investors reckon with large-scale volatility and future rate cuts.
Sector Opportunities	Focus on lower P/E stocks and emerging themes like AI and panels.

Last edited at：2025/8/22