Taiwan stocks stabilize above 28,000 points as foreign capital withdraws significantly; Asian financial stocks become the new favorite

Fed Countdown to Rate Cut: 98 Hours Remaining. The Taiwan Weighted Index surged past the 28,000-point mark, with the three major institutional investors jointly mobilizing NT$19.117 billion today, setting a new recent single-day net buy record. This is not just a technical breakout; it hints at deeper shifts in the global capital landscape—arbitrage in US tech stocks at high levels, with funds shifting toward undervalued Asian financial and consumer sectors.

Foreign Investors Sweep NT$14 Billion in a Single Day; TSMC and Hon Hai Targeted

Foreign investors bought a net NT$14.088 billion today, continuing four days of net purchases in Taiwan stocks. This week, they have invested NT$36.8 billion cumulatively. The buying was concentrated in three large-cap stocks: TSMC absorbed 10,500 lots, Hon Hai 5,200 lots, and Nanya Technology 2,500 lots. The logic behind this wave of buying is clear—moving away from the US tech bubble and into Asian blue-chip stocks with solid fundamentals.

Domestic institutional investors shifted strategies from high-priced tech to undervalued financials. Fubon Financial was highlighted with a net buy of 3,801 lots. Strategists say this is a typical “hedge rotation”—tech stocks have risen significantly, and the dividend yields of financial stocks above 5% are becoming more attractive. Proprietary traders were the most aggressive, net buying NT$4 billion to scoop up memory and PCB concept stocks, with Walsin and Unimicron breaking 1,800 and 1,740 lots respectively, reflecting expectations of full server orders and inventory replenishment.

The eight major state-owned banks sold NT$2 billion worth of stocks in a contrarian move, further reinforcing bullish consensus.

Asian Capital Reversal: $15 Billion USD Net Inflow Reshapes Market Dynamics

The US dollar index fell to 102.5, with dovish Fed expectations fermenting. Over the past week, net foreign investment into Asian markets exceeded $15 billion USD, signaling reallocation of assets.

The Nikkei 225 rose 1.2% to 39,800, led by a 2.5% surge in banking stocks. Japanese domestic investors’ share dropped from 51% to 40%, indicating local capital is beginning to take over. Korea’s KOSPI gained 0.8% to 2,650 points; China’s Shanghai Composite increased 0.3% to 3,150, with manufacturing stocks like CATL up 1.1%, benefiting from a consumption recovery; India’s Nifty 50 rose 0.9% to 24,200.

More noteworthy is the distribution of inflows: India and Vietnam each attracted $2 billion USD, driven by 6-7% GDP growth and supply chain shifts. OECD forecasts that by 2025, Asian capital inflows will reach $50 billion USD, indicating global institutional investors are systematically adjusting their Asian allocations.

Internal Reshuffle in Taiwan Stocks: Semiconductors, PCB, and Glass Take Turns Leading Gains

The weighted index rose 322.89 points to 28,303.78, with trading volume expanding to NT$424.744 billion, but the internal sector shifts are even more intriguing.

The semiconductor index soared 2.31%, with WPG, Walsin, VSE, Siliconware, and Powertech hitting daily limit-ups. Nanya Technology rose 6.86% to NT$163.5, with trading activity showing foreign and proprietary traders rushing into DRAM and NAND spot markets—this 15% price increase and inventory replenishment are driven by real demand, not just speculation. The glass sector rose 4.22%, led by Taiwan Glass up 4.8% to NT$38.2 and Fuhong Tech up 7.73%, reflecting a recovery in display demand. PCB stocks continued their hot streak, with Unimicron up 4.8%, signaling that the recovery in the global electronics supply chain has propagated from upstream components to midstream.

Large-cap stocks: TSMC rose 2.4% to NT$1,495 (up NT$35), contributing over 200 points to the index; Hon Hai and MediaTek gained 0.43% and 1.05%, respectively. Financials rose 0.28%, with Fubon Financial and Taishin Financial up over 2%. The Taiwanese dollar appreciated to NT$31.25, lowering exchange costs and boosting dividend yields, supporting year-end profit-taking and valuation appeal.

This rotation is driven by the combined effects of dovish Fed expectations and year-end profit-taking logic—historical data shows an average decline of 2.15% in November, followed by a 4-6% rise in December. However, whether the internal structure can sustain this remains uncertain.

Warning Signs: 15 Stocks with 30-50% Offload Ratios, Short-term Speculation Risks Rise

Despite the bullish sentiment, the Taiwan Stock Exchange has flagged 15 stocks for attention, including Nanya Technology, Walsin, Unimicron, Taiwan Glass, Powertech, Wistron, Inventec, Innolux, Taishin Financial, Wente, Nanya Circuit, Evergreen Marine, among others, mostly in semiconductors, PCB, glass, and shipping.

These stocks share common features: large gains (6%-10%), abnormal trading signals, and high offload ratios of 30-50%. For example, Nanya Technology’s offload ratio is 45%, indicating short-term speculative buying by retail investors. Walsin hit the limit-up but with a 30% offload ratio, reflecting a tug-of-war between major players controlling the stock and retail chasing higher prices.

Moore Investment Consulting analyst Hsieh Wen-En warns that year-end profit-taking could tempt retail investors to chase high prices, similar to the pre-signal of the August 2024 Taiwan index futures limit-down event. Investors are advised to reduce holdings on rallies, shift into fundamentally stable financials and large-cap stocks (like Fubon Financial, TSMC), set stop-losses within 5%, and diversify holdings while monitoring Fed meeting outcomes.

Technical Outlook: Taiwan Stocks Strengthen, but Year-End Variables Cannot Be Ignored

The RSI of the weighted index rose to 68, entering a bullish zone. Support is at 28,000 points, with resistance at 28,500. PGIM Prudential analysts believe that the traditional December peak season, combined with AI profit momentum, could push Taiwan’s market cap to NT$82.5 trillion, with trading volume expected to rebound to NT$4.5 trillion.

However, caution is warranted: if the core PCE data released after the Fed meeting exceeds expectations, it could trigger profit-taking waves. Additionally, speculative risks are emerging, with retail chasing high and institutional manipulation potentially causing reversals at any time.

Overall, this rally in Taiwan stocks is not only an extension of the Fed effect but also reflects the rising strategic importance of the Asian market in global capital rotation. Investors should balance optimism with caution, closely monitor tonight’s US data and Fed decisions, to seize the year-end opportunities while remaining alert to risk signals.