Trading on Taiwan's stock exchange is set to resume on Monday following the Peace Memorial Day holiday, with investors returning to a market that has climbed to significant heights. The benchmark Taiex index closed its last session at 35,414.49, marking an advance of approximately 5.38% since February 11. According to the Taiwan Stock Exchange, the total market capitalization of listed companies reached NT$115.41 trillion, underscoring the substantial scale of the recent rally.
Tech Titans Drive Momentum
The market's trajectory continues to be heavily influenced by semiconductor and artificial intelligence-related equities. As a capitalization-weighted index, the Taiex is particularly sensitive to moves in its largest constituents, which are predominantly technology supply chain giants. Taiwan Semiconductor Manufacturing Co. (TSMC), a bellwether for the sector, recently surpassed the NT$2,000 per share level. Dealers noted that this move was bolstered by gains in its U.S.-listed American Depositary Receipts (ADRs), reflecting synchronized optimism across markets.
Analyst Tom Tang of MasterLink Securities attributed the persistent strength to ongoing enthusiasm surrounding the "current AI boom." Foreign institutional investors were net buyers in the last session, according to exchange data, providing further support. Daily turnover on Thursday amounted to NT$1.14 trillion, as reported by CNA, indicating robust trading activity.
Global Headwinds and Profit-Taking Risks
However, the landscape shifted late last week in overseas markets. Global equities faced pressure on Friday as investors reassessed high-valuation technology names and potential repercussions from the AI sector's rapid expansion. Brent crude oil prices rose 2.45%, fueled by geopolitical tensions between the U.S. and Iran, according to Reuters.
The sharp rally in Taiwanese stocks introduces a clear local risk: profit-taking. Huang Kuo-wei, Vice President at Mega International Investment Services, cautioned that following such a rapid ascent, short-term selling could emerge quickly when trading resumes. He advised investors to monitor reactions to news flow, particularly any headlines driven by AI leader Nvidia.
U.S. Economic Calendar Takes Center Stage
With a light local news schedule, early-week sentiment in Taipei is expected to be dictated by economic data from the United States. The U.S. Employment Situation report for February, scheduled for release on March 6 according to the U.S. Labor Department, is the week's marquee event. Wall Street is also bracing for potential volatility from Broadcom's earnings and key Purchasing Managers' Index (PMI) surveys from major economies, which may offer early signals ahead of the payrolls data.
Market strategists highlight the ongoing debate around AI's market impact. Kristina Hooper, Chief Market Strategist at Man Group, told Reuters of a continuing "back and forth" over identifying AI winners and potential victims. Talley Leger of The Wealth Consulting Group suggested the semiconductor sector might be due for "a breather" after its steep rally.
Currency Market Adjustments
Adding another layer to the regional context, China's central bank announced plans to eliminate the 20% reserve requirement for foreign exchange forward contracts effective March 2. This policy adjustment, reported by Reuters, is expected to reduce the cost of buying U.S. dollars and could increase activity in regional currency trading.
As trading recommences, the Taiwanese market finds itself at a crossroads: buoyed by a powerful, sector-specific rally but facing immediate tests from international data and the natural inclination to lock in gains after a significant advance. The interplay between enduring AI optimism and pragmatic reaction to global cues will likely define the Taiex's path in the coming sessions.
