- Taiwan's TAIEX index has surged, driving the country's total market capitalization over $5.3 trillion. This now makes it the world's fourth-largest equity market.
- The surge is largely thanks to demand for AI-related semiconductors, with TSMC at the forefront. Strong factory activity, healthy export orders, and continued foreign institutional buying also bolster the market.
- Analysts expect further gains in the fourth quarter, perhaps reaching 50,000 points. Still, the market's heavy reliance on a few mega-cap technology stocks creates some risk.
Taiwan’s TAIEX index closed higher Thursday, gaining 413 points to reach 48,353. This marked another session above 48,000, after earlier intraday trading briefly pushed it past 48,600 in late September.
The market’s strong showing pushed Taiwan’s equity capitalization past $5.3 trillion. This makes it the world’s fourth largest, with year-to-date gains exceeding 66%.
AI Boom Still At the Center of Upsurge
This sustained climb largely reflects global investment in artificial intelligence and Taiwan’s central role in the advanced semiconductor supply chain. Taiwan Semiconductor Manufacturing Company (TSMC), which accounts for over 40% of the TAIEX’s market value, led the way, climbing 1.2% to a new record closing price.
Other companies like MediaTek, Delta Electronics, Hon Hai Precision, and United Microelectronics also posted strong gains.
MediaTek’s customized chip development, alongside contributions from system integrators like Hon Hai Precision Industry (Foxconn) and power management specialist Delta Electronics, has fueled a collective surge in the technology sector.
Recent advances in packaging technologies, such as glass substrate applications and the mass production of next-generation server platforms, have boosted investor confidence even more.
Solid economic data supports the market’s strength. The S&P Global Taiwan manufacturing PMI, for instance, reached 56.7 in September, up from 54.7 in August, marking its highest point since August 2021.
Both output and new orders grew at their fastest pace in over five years. Export orders, largely driven by AI-related products, expanded more quickly than they had since July 2021. This suggests strong customer demand, which provides a firm basis for investment valuations.
Is the Market Overheated?
Even though recent gains have pushed valuations higher and created concentration risk because of TSMC’s heavy index weighting, many institutional strategists feel the market’s current trajectory has strong underlying support.
Taiwanese listed companies are expected to see strong earnings growth through 2027. Some forecasts even predict profit increases of 37-42% this year and next, mostly tied to AI infrastructure investments.
Local research firms have set year-end TAIEX targets between 50,000 and 55,000 points. They’re basing these targets on ongoing capital spending from hyperscalers, the expansion of advanced manufacturing processes and packaging capacity, and steady inflows into local ETFs.
Still, challenges persist. For growth to last, AI demand needs to keep up, and companies must turn their order books into actual profits. On the flip side, we could see risks like a narrow market leadership, possibly weaker trading volumes, and vulnerability to global economic fluctuations.
We’ll probably see further gains, though likely with more volatility, as the market tries to figure out if the 48,000 level can hold as a support point.
Taiwan’s tech exporters and the broader market are doing well, driven by strong global demand for advanced semiconductors and AI hardware.
The S&P Global Taiwan manufacturing PMI hit 56.7 in September, the highest it’s been since August 2021. Export orders also grew at their fastest rate since July 2021.
TSMC makes up over 40% of the market’s total capitalization. This means if its shares fall, the entire index can get pulled down.