Taiwan stocks restart the 28K milestone: Asian funds shift focus, institutional investors reverse trend with a single-day investment of 19.1 billion yuan

The countdown to Fed rate cuts (probability 96%) has driven global capital reallocation. Today, Taiwan stocks surged with the combined efforts of the three major institutional investors, with the Weighted Index rising 322.89 points to 28,303.78 (up 1.15%). Daily trading volume increased to NT$424.744 billion, officially stabilizing above the 28K level. Notably, foreign investors, investment trusts, and proprietary traders together bought a net NT$19.117 billion, hitting a recent single-day high and reflecting international capital repositioning toward Taiwan stocks.

Meanwhile, the Nikkei 225 index rose 1.2% to 39,800 points, and the Japanese yen weakened to around 2,500 yen per US dollar, triggering a structural shift in regional capital flows within Asia. Taiwan stocks are becoming the main beneficiaries of this capital rotation.

The Three Major Institutional Players’ Allocation Strategies: Foreign Investors Lead with NT$14 Billion in Large-Cap Stocks, Investment Trusts Shift to Financials

According to data from the Taiwan Stock Exchange, the three major institutional investors showed clear division in their buying strategies today:

Foreign investors bought NT$14.088 billion, continuing a four-day buying streak, with a total of NT$36.8 billion entering this week. Their focus was on large-cap stocks and memory chip groups—TSMC attracted 105,00 contracts, rising 2.4% to NT$1,495 during the session, contributing over 200 points to the index; Hon Hai and MediaTek attracted 5,200 and over 1,000 contracts respectively, reflecting international institutional confidence in Taiwan’s tech giants’ fundamentals.

Investment trusts adopted a defensive stance, reducing their net buy to NT$1.029 billion but cleverly shifting focus to financial stocks. Fubon Financial was heavily accumulated with 3,801 contracts, indicating professional investors are starting to avoid high-priced tech stocks and turning toward undervalued financial stocks with dividend yields over 5%.

Proprietary traders played a contrarian role, with a net buy of NT$4 billion, focusing on memory and PCB concepts. Walsin and Unimicron, with 1,800 and 1,740 contracts respectively, became key targets, reflecting optimism about supply chain opportunities amid full orders for AI servers.

Sector Rotation Accelerates: Semiconductor Limit-Up Wave vs. Risk Warning Lights

Internal sector rotation in Taiwan stocks has reached a fever pitch. The semiconductor index surged 2.31%, with five stocks—Macronix, Walsin, Vanchip, Siliconware, and Huadong—hitting the daily limit. Nanya Technology rose 6.86% to NT$163.5, benefiting from a 15% increase in DRAM and NAND prices and inventory replenishment demand.

The glass industry also performed strongly, with an overall gain of 4.22%, leading all sectors. Taiwan Glass rose 4.8% to NT$38.2, and Fuhong Technology increased by 7.73%. The PCB sector continued its hot streak, with Unimicron up 4.8%, driven by global AI server order saturation and expectations of a recovery in the electronics supply chain.

However, the Securities Exchange issued a warning, listing 15 stocks to watch, with short-term overbought ratios of 30-50%. Popular stocks like Nanya Technology, Walsin, Unimicron, and Taiwan Glass are all included, indicating signs of short-term speculation and dominant control by major players.

Capital Rotation in Asia: From US Tech Bubble to Eastern Value Stocks

The US dollar index fell to 102.5. Overvalued US tech stocks face correction pressures, prompting international funds to withdraw from the region and shift toward Asian markets’ financial and consumer value stocks. This week, net foreign inflows into Asia exceeded US$15 billion, with India and Vietnam each attracting US$2 billion, benefiting from 6-7% GDP growth and the redirection of global supply chains.

Japanese markets showed bright spots: despite foreign holdings decreasing to 40%, bank stocks gained 2.5% amid yen depreciation (approaching 2,500 yen per dollar), boosting export competitiveness. Japanese bank stocks became favorites among foreign investors. China’s manufacturing giant CATL rose 1.1%, reflecting optimistic consumption recovery expectations.

Taiwan stocks are becoming a hub of capital rotation, with financial stocks rising 0.28%. Fubon Financial and Taishin Financial gained over 2%, supported by the Taiwanese dollar appreciating to NT$31.25, reducing currency exchange costs for financial institutions and increasing overseas asset returns.

Risk Warnings and Year-End Strategies: Beware of Overheating, Focus on Fundamentals

Moore Investment Consulting analyst Hsieh Wen-en issued a warning: year-end window dressing may tempt retail investors to chase high prices. The RSI of Taiwan stocks has risen to 68, indicating a bullish zone. Support is at 28,000 points, with technical resistance at 28,500 points. If data after the Fed meeting shows strong performance (e.g., core PCE inflation exceeding expectations), profit-taking and corrections are highly likely.

Fubon Investment Advisory Chairman Chen Yiguang pointed out that historical data shows December average gains of 4-6%. However, the current market structure shows clear cracks—overly high overbought ratios in peak stocks suggest limited upside. Investors should reduce holdings at high levels, diversify into fundamentally stable financial and large-cap stocks like TSMC and Fubon Financial, and set stop-losses within 5%. Close attention should be paid to tonight’s US economic data and the Fed’s decision announcements in the coming days.

Overall, while the Taiwan stock market holding above 28K is encouraging, internal structural risks should not be underestimated. Rational responses to the opportunities and traps of Asian capital rotation are key to long-term success.