High-rise buildings are dotted across Taipei, the capital of Taiwan.
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Taiwan stocks hit a record high on Friday as strong demand for artificial intelligence and semiconductor technology boosted investor optimism about Taiwan’s technology companies.
Market observers expect gains in Taiwan’s stock market to strengthen further.
this Taiwan Weighted Index The index hit an intraday high of 20,296 points before giving up gains, according to Factset data. Paul You, chairman of Firstrade Investments, said the number could rise to 24,000 by the end of the year.
Global demand for artificial intelligence has been strong over the past two to three months and remains “very promising,” You said. While other industries struggle amid global macro uncertainty, Asia-Pacific’s technology sector has been expanding on the back of a semiconductor boom.
You said this laid the foundation for the island’s economic prosperity, which has “the strongest artificial intelligence service manufacturing supply chain.”
I expect the stock market to be very strong this year and we expect the Fed to cut interest rates.
Alicia Garcia-Herrero
Chief Economist, Natixis Asia Pacific
Chip giant TSMC is Nvidia’s main contract chip manufacturer. Thanks to Nvidia’s performance and potential, its stock price has surged more than 30% so far this year. TSMC is the largest component of the Taiwan Stock Exchange.
Taiwan equipment assembly company shares such as Quanta Computer and Wistron Information Technology Co., Ltd. According to LSEG data, the stock has also risen by more than 14% and 24% respectively this year.
Alicia Garcia-Herrero, chief Asia-Pacific economist at Natixis, said another reason for Taiwan’s stock market rally was an increase in fixed-asset investment since the January election, which has brought some uncertainty. She also said the boom in artificial intelligence will further drive gains.
“I expect stocks to be very strong this year, and we expect the Fed to cut interest rates,” she added.
Fed cuts interest rates usually boosts the stock market Because lower interest rates mean lower borrowing costs for businesses and individuals.
Taiwan stock market hits new high
Putting aside the focus on superstar industries such as semiconductors and artificial intelligence, You also said that some domestic industries such as Taiwan’s precision machinery, automation technology and consumer fields are still undervalued.
He added that some rotation in these sectors may be needed to push the benchmark index to a record high. Industry rotation involves the movement of funds from one industry to another in anticipation of the next phase of the economic cycle.
“So I believe if we’re going to get to 24,000, we’re going to need to add some department rotation,” he said.
Goldman Sachs said in a recent report that despite strong overall index performance, Taiwan’s “market breadth has been narrow” as less than half of Taiwanese stocks have posted positive returns so far this year.
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