Foreign Selling Pressures Taiwan’s AI Supply Chain as Investors Await Bottoming Signals
Table of Contents
You might want to know
- Why has Taiwan’s stock market weakened despite Taiwan Semiconductor Manufacturing Company’s earnings conference?
- What signs are traders watching for before considering that the market may be forming a bottom?
Market pressure and investor positioning
Global volatility has intensified, weighing on Taiwan equities and the technology supply chain. The U.S. fear gauge, the VIX, surged, while the Philadelphia Semiconductor Index fell nearly 4% last Friday. Meanwhile, Taiwan Semiconductor Manufacturing Company (台積電, 2330-TW) held its earnings conference, but the expected positive market response failed to materialize. Taiwan’s stock market fell 2202 points last week, a decline of 4.4%. Traders warn that when positive news does not lift prices, selling pressure may remain pronounced. The benchmark could test support near its quarterly moving average, around 46000 points, this week. With the New Taiwan dollar also facing heavy-volume declines, bearish momentum has strengthened in the short term, leaving investors watching for prompt signs of a market bottom.
Foreign investors were major sellers in Taiwan’s main market last week, withdrawing a total of 5862 billion yuan. Investment trusts took the other side of the trade, buying 881 billion yuan in what market participants described as a “you sell, I buy” pattern. However, that institutional demand was not enough to establish a strong floor beneath share prices. The contrast highlights how a substantial domestic buying response can still be overwhelmed when overseas investors reduce exposure on a broad scale.
By share volume, the largest foreign net sale was in Yuanta Taiwan Top 50 (元大台灣50, 0050-TW), with nearly 270,000 lots sold. Next came CTBC Taiwan High Dividend Growth Active ETF (主動中信台灣收益, 00406A-TW), at 255,000 lots, and Capital Taiwan Growth Active ETF (主動統一台股增長, 00981A-TW), at 234,000 lots. Capital Taiwan Upgrade 50 Active ETF (主動統一升級50, 00403A-TW) and Powerchip Semiconductor Manufacturing Corporation (力積電, 6770-TW) each recorded 190,000 lots in foreign net sales.
Other substantial net sales included Fuh Hwa Taiwan Future 50 Active ETF (主動復華未來50, 00991A-TW), at 98,000 lots; Taiwan Semiconductor Manufacturing Company (2330-TW), at 97,000 lots; Nanya Technology (南亞科, 2408-TW), at 90,000 lots; United Microelectronics Corporation (聯電, 2303-TW), at nearly 70,000 lots; and Formosa Plastics (台塑, 1301-TW), at 63,000 lots. The list spans index-tracking and actively managed funds as well as semiconductor and traditional industrial companies, suggesting that the selling was not limited to a single corner of the market.
Measured by value rather than share volume, Taiwan Semiconductor Manufacturing Company saw the largest foreign withdrawal: 2415 billion yuan last week. MediaTek (聯發科, 2454-TW) followed, with 751 billion yuan in net selling. Nanya Technology recorded 433 billion yuan, Delta Electronics (台達電, 2308-TW) 376 billion yuan, and Yuanta Taiwan Top 50 nearly 300 billion yuan. These figures indicate that foreign investors were reducing positions in some of the market’s largest and most closely watched technology-related names, adding pressure to benchmark performance.
Traders believe that the market’s failure to rise on favorable news before reaching the 50,000-point threshold, followed by heavy selling, primarily reflects U.S. inflation pressure and various international systemic risks. In their view, the weakness does not necessarily signal doubts about the underlying fundamentals of Taiwan-listed companies. Rather, investors are waiting for substantial dip-buying demand to emerge. Until there is clearer evidence of such demand, traders say it is prudent to take a cautious view of international financial developments this week.
In its outlook, SinoPac Securities Investment Service (永豐投顧) noted that U.S. consumer price index (CPI) inflation was higher than expected. Even so, the firm considers it more likely that the Federal Reserve will leave rates unchanged in October. Its assessment also says that, because oil prices are unlikely to fall easily in the short to medium term, the direction toward one more rate increase during the year has not changed. These competing considerations leave markets sensitive to inflation releases, energy prices, and shifts in expectations for monetary policy.
The advisory firm cautions that inflation-driven expectations of higher interest rates could lead to lower valuations for technology stocks. That concern is particularly relevant for investors assessing high-growth companies, whose share prices can be sensitive to changes in discount rates and future earnings assumptions. At the same time, SinoPac Securities Investment Service views long-term positioning at current levels as attractive. It suggests that investors could consider building positions if bearish news remains present but market losses begin to narrow, or if prices rebound. Such a setup, however, may take 2 weeks or more to develop.
The near-term picture therefore combines substantial foreign selling, weak performance across technology shares, and uncertainty about global inflation and interest rates. The decline in the broad market and the large outflows from major stocks and funds are tangible signs of risk aversion, but they do not by themselves confirm that a lasting bottom has formed. Traders are looking for evidence that sellers are losing momentum and that buyers are willing to absorb supply. A narrowing decline or a rebound could offer clues, while further weakness in the New Taiwan dollar or renewed global market stress could keep pressure on local shares.
Investors assessing the situation can distinguish between short-term market movements and longer-term investment decisions. In the short term, foreign flows, currency pressure, oil prices, and inflation expectations may continue to shape sentiment. Over a longer horizon, the key question is whether a company’s business prospects and fundamentals remain intact despite valuation volatility. The commentary from traders and the advisory firm points toward patience: avoid assuming that a price decline alone marks a bottom, and watch for improving price action and stronger buying interest before drawing conclusions.
Key Insights Table
| Aspect | Description |
|---|---|
| Taiwan market performance | The market fell 2202 points, or 4.4%, last week after the Philadelphia Semiconductor Index dropped nearly 4% and positive TSMC news failed to lift prices. |
| Foreign investor activity | Foreign investors withdrew 5862 billion yuan, while investment trusts bought 881 billion yuan, an amount traders said was insufficient to establish strong support. |
| Notable value-based selling | Foreign net sales included 2415 billion yuan in TSMC, 751 billion yuan in MediaTek, and 433 billion yuan in Nanya Technology. |
| Key market risks | Traders cite U.S. inflation, international systemic risks, currency weakness, and the possibility of lower technology valuations. |
| Potential bottoming signals | Investors are watching for strong dip-buying, a narrowing decline, or a rebound before concluding that a market bottom may be forming. |
| Policy and investment outlook | SinoPac Securities Investment Service expects the Federal Reserve is more likely to hold rates in October, while the outlook for one more rate increase during the year remains unchanged. |
Afterwards...
The next phase for Taiwan equities may depend on whether selling pressure eases and meaningful buyers step in. Until that becomes clearer, market participants are likely to remain focused on international financial conditions, inflation, oil prices, and currency moves. A decline that narrows or turns into a rebound could provide an early signal, but confirmation will require sustained buying rather than a brief change in direction. For longer-term investors, the central task is to separate temporary market stress from changes in company fundamentals, while recognizing that the timing of a more durable recovery remains uncertain.
Last edited at：2026/10/18
