AI boom drives Taiwan stocks to new highs, First Financial sees long-term potential

Taiwan's stock market is experiencing a surge, fueled by the ongoing AI boom, with First Financial Holding Co. reporting record profits for the first five months of the year. The company's general manager, Li Shu-ling, maintains a positive outlook on the market's long-term prospects, emphasizing the strong investment momentum driven by AI.

However, Li advised investors to participate in the market with long-term, stable capital and to avoid excessive leverage. She noted that the current market enthusiasm, with many tech employees seeing stock investments surpass their primary income, is reminiscent of the 1980s. Despite this, she believes the current stock rally is not solely driven by liquidity but is grounded in corporate profit growth, technological innovation, and the expanding applications of AI.

The AI revolution is creating a ripple effect across various sectors, extending beyond the traditional semiconductor industry. Li highlighted that benefits are now reaching construction, civil engineering, equipment supply, logistics, and service industries, fostering a scenario where "all trades and professions benefit together." This broad economic uplift is also reflected in increased demand for business loans, with financial institutions like First Bank seeing a surge in credit applications from securities firms experiencing rapid growth in their financing businesses.

Regarding the potential for financial industry consolidation, Li offered a personal perspective, suggesting that public financial institutions have historically been hesitant due to concerns over employee rights and labor unions. However, she acknowledged that to enhance scale and competitiveness amidst intensifying international competition, mergers and acquisitions might become necessary. She believes that such consolidation, whether between public or private entities, should be evaluated based on strategic fit and complementary business, customer, or product synergies, ultimately aiming to bolster overall competitiveness by acquiring talent, products, and customer resources.