Taiwan stocks extended Friday’s rebound momentum on Monday (the 3rd), with the Taiex climbing 266.66 points to close at 43,386.41, recapturing the 10-day moving average, with more than 100 stocks hitting their daily upside limits. However, trading volume was notably insufficient, even falling below the 5-day average volume, suggesting weak willingness among investors to chase prices. President Securities issued its latest report noting that the monthly moving average above remains downward-tilting, forming overhead resistance, and the index still needs time to consolidate. A healthier trajectory would be to wait for the monthly line to turn upward again.
The session was led by a broad AI sector rally, with strong performances across ASIC, PCB, ABF, memory, and thermal management stocks. TSMC (2330.TW) fell 2.27%, “sacrificing itself” to enable the broader AI complex to advance; MediaTek (2454.TW) surged 9.99% to hit its daily limit; Hon Hai (2317.TW) rose 1.00%; Quanta Computer (2382.TW) gained 1.72%; Delta Electronics (2308.TW) declined 3.66%. Additionally, a senior vice president at NVIDIA recently announced that co-packaged optics (CPO) is entering mass production, driving multiple CPO concept stocks to their daily upside limits. In the traditional sector, biotech and select steel stocks also performed well.
Strong performers on the day included MediaTek, ASE Technology Holding (3711.TW), Global Unichip (3443.TW), ASMedia Technology (5274.TW), Winbond Electronics (2344.TW), King Slide Works (2059.TW), Yageo (2327.TW), Gold Circuit Electronics (2368.TW), Unimicron Technology (3037.TW), MPI Corporation (6223.TW), Wiwynn (6669.TW), and PharmaEssentia (6446.TW), totaling 108 stocks hitting daily limits. On the weak side, only Junbon (4442.TW) hit its daily downside limit, while Aero Win Technology (3004.TW), Chroma ATE (2360.TW), Hotai Motor (2207.TW), and Zero One Technology (3029.TW) fell more than 5%.
Looking at sector performance, the three major categories were mixed: electronics rose 0.72%, traditional industries gained 1.09%, and financials fell 0.94%. Among sub-sectors, biomedical, electromechanical, and glass performed best, rising 5.99%, 4.46%, and 3.66%, respectively.
Foreign Investors Sell Over NT$19 Billion While Local Institutions Buy
On the fund flow front, the three major institutional investors recorded a combined net sell of NT$16.52 billion, with foreign investors selling NT$19.19 billion, investment trusts buying NT$23.33 billion, and proprietary dealers selling NT$20.65 billion — a classic foreign-versus-local divergence. Foreign investors’ top five buys were Winbond, Wistron (3231.TW), EVA Air (2618.TW), Nanya Technology (2408.TW), and Inventec (2356.TW); their top five sells were UMC (2303.TW), Nan Ya Plastics (1303.TW), Taiwan Business Bank (2834.TW), PSMC (6770.TW), and Taiwan Cement (1101.TW).
On margin trading, margin purchases increased by NT$7.29 billion to a balance of NT$514.76 billion; short sales decreased by 3,000 lots to a balance of 185,300 lots. Foreign investors added 7,523 contracts to their short positions in Taiwan index futures, bringing net short positions to 90,038 contracts. Securities lending sales amounted to NT$24.21 billion. By trading weight, electronics accounted for 87.40%, traditional industries 8.92%, and financials 3.68%.
Trump Calls Off Iran Strikes; Oil Plunge Boosts Risk Appetite
On the international front, the U.S. ISM manufacturing PMI for July rose to 55.6, indicating accelerating manufacturing expansion. Trump’s decision to cancel the strike plan against Iran sent international oil prices tumbling, helping lift market risk appetite. On earnings, Palantir reported second-quarter revenue of $1.94 billion (approximately NT$63 billion), up 93% year-over-year, with EPS of $0.41, beating market expectations of $0.34 (approximately NT$11). The stock surged 14% in after-hours trading. Monday saw all four major U.S. indices close higher, with TSMC ADRs gaining 0.46%.
TWSE to Amend Disposition Rules Effective August 10
President Securities highlighted three key points in its market analysis. First, the Taiwan Stock Exchange (TWSE) announced amendments to its attention and disposition rules on the 3rd, effective August 10, with three major changes: adjustment of disposition periods — for securities subject to disposition for the first time or repeatedly, the disposition period is shortened to five trading days; for securities with excessive day-trading ratios (exceeding 60%), the disposition period is adjusted to seven trading days. The matching interval is adjusted to once every two minutes across the board. The price range standards for closing price limits on high-priced stocks above NT$1,000 are relaxed, reducing the frequency with which high-priced stocks trigger alert thresholds.
Second, the Chung-Hua Institution for Economic Research (CIER) reported that Taiwan’s July manufacturing PMI rose to 61.5, marking the tenth consecutive month of expansion; the non-manufacturing index (NMI) fell from 59.9 to 57.3. Robust exports are keeping the manufacturing sector optimistic, but the greater volatility in Taiwan stocks in July may prompt more caution in some domestic consumption.
Third, on the technical front, Monday saw the Taiex continue its rebound on shrinking volume, with technical indicators KD and RSI pointing upward and the MACD green histogram contracting. The index currently holds above the short-term moving averages (5-day and 10-day), but the monthly moving average above remains downward-tilting, forming overhead resistance. The index faces significant overhead supply between the monthly and quarterly moving averages, requiring volume expansion for further advances.
Trading Strategy: Buy on Dips, Rotate Out of Weak Holdings
President Securities said that corporate investment is driving steady U.S. economic expansion, and this week’s employment and PMI data are expected to show stable growth. Combined with falling oil prices and the recent clearing of market positions, this should help technology valuations return to reasonable ranges. As major U.S. and Taiwan tech companies report earnings and hold investor conferences, AI-driven contributions to tech earnings have been broadly impressive. However, Taiwan stocks still face layered overhead supply on the technical front in the near term, along with resistance at the quarterly moving average of 44,100 points. With foreign investors holding over 90,000 net short futures positions, the index still needs time to consolidate.
In terms of strategy, the firm recommends “maintaining healthy cash levels, buying on dips, and rotating out of weak holdings into strong ones during rebounds,” with stock selection focused on liquid large- and mid-cap AI heavyweights. Long-term tracking groups include: TSMC and advanced process/packaging, substrates and PCB, power management-related, chassis and slide rails, robotics concepts, specialty chemicals, and bicycles.