Taiwan Stocks Soar on COMPUTEX and AI Boost, June Highs Seen at 46,000

Taiwan's stock market experienced a remarkable surge in May, closing the month at 44,732 points and achieving its strongest May performance in history with a gain of 5,896 points. This rally has propelled the Taiwan Weighted Index (Taiex) to a 109.55% increase over the past year, placing it third globally in stock market performance, trailing only South Korea and the Philadelphia Semiconductor Index.

Investment institutions note that the market's strength in May was driven by AI, semiconductor, and passive component sectors, attracting significant buying interest. Despite strong upward momentum, the index struggled to consistently stay above 42,000 points, indicating investor caution amidst rapid gains. A mid-May pullback, influenced by a correction in US tech stocks, saw the Taiex briefly dip near 40,000 points, sparking concerns about the end of the first-half rally. However, fundamental support prevented a breach of 40,000, and the market quickly recovered, surpassing previous highs to reach over 43,000 points.

The resurgence was fueled by optimistic outlooks for AI servers and the semiconductor supply chain, a return of both domestic and foreign capital, and positive signals from major companies like NVIDIA and TSMC. Analysts at Yong Feng Investment Advisory highlighted that while market sentiment is strong, the index's rapid ascent has created short-term overheating, with pressure to consolidate towards the quarterly moving average. They advise caution against chasing highs, especially for investors using leveraged instruments.

Looking ahead to June, the COMPUTEX 2026 Taipei International Computer Show is a key focus, alongside NVIDIA's GTC Taipei conference, both centered on AI. The AI server, cooling, passive component, IC design, and robotics supply chains are expected to attract investment. However, much of the positive news may already be priced in, and the index's current high level relative to the quarterly average suggests a sensitive zone for profit-taking. Investors are advised to reduce positions, especially those using leverage, while holding onto quality stocks with solid fundamentals in the AI and semiconductor sectors for long-term growth.