Taiwan Stock Market 'Playing With Fire'? Hsieh Chin-ho Says Global Semiconductors Are Surfing

The recent volatility in Taiwan's stock market has sparked discussions about overheating, with some analysts raising concerns about a potential crash. However, as financial commentator Hsieh Chin-ho points out, the narrative of a purely domestic bubble overlooks the powerful global forces at play, particularly the unprecedented surge in the semiconductor sector. This distinction is crucial for understanding Taiwan's unique position in the global economy.

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This is the chip wave led by AI. Taiwan has TSMC leading the charge, but in the memory market such as HBM and SSD, Taiwan is not the protagonist.

Hsieh's analysis, shared on his Facebook, directly addresses the widely cited Buffett Indicator, which suggests Taiwan's market is significantly overvalued. He correctly identifies that Taiwan Semiconductor Manufacturing Co. (TSMC), a cornerstone of the global tech supply chain, disproportionately influences this metric. Its immense market capitalization alone pushes the indicator far beyond traditional warning levels. This phenomenon is not new; it has been a feature of the Taiwanese market for two decades as TSMC cemented its global role.

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Saying the Taiwan stock market is playing with fire is like saying the global semiconductor stocks are surfing!

What is particularly noteworthy from a Taiwanese perspective is the global focus on semiconductors, a sector where Taiwan, through TSMC, plays a leading role. While Hsieh acknowledges Taiwan's strength in chip manufacturing, he also highlights that in specific areas like High Bandwidth Memory (HBM) and SSDs, other players are dominant. This nuanced view is important. It prevents a simplistic celebration of Taiwan's market performance and instead underscores the dynamic and competitive nature of the global semiconductor industry.

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The Buffett Indicator has always been a measure of whether a market is overheated. Generally, exceeding 100% indicates overheating, and exceeding 120% is a warning sign.

Furthermore, Hsieh's comparison with Hong Kong's market, which has also shown a high Buffett Indicator due to the listing of numerous Chinese state-owned enterprises in a relatively smaller economic base, provides useful context. It illustrates that high ratios do not automatically equate to imminent collapse. The underlying economic fundamentals and the specific characteristics of each market play a significant role. From Taiwan's vantage point, the current market conditions are less about domestic speculation and more about riding the wave of a global technological revolution, with semiconductors at its epicenter. This is a story of global innovation and Taiwan's integral, yet not exclusive, role within it.

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The main reason why the Taiwan stock market has not collapsed is that TSMC's market value has propped up the Taiwan stock market.