Taiwanese Investors 'Move Money' into Stocks Amid AI Frenzy, Not Heavily Borrowing

Taiwan's stock market is experiencing a surge, hitting new highs fueled by the artificial intelligence craze. While there are concerns about aggressive trading strategies, such as combining mortgage, car, personal, and margin loans, termed "four loans combined", financial institutions believe these high-leverage operations are likely uncommon.

Instead of extensive borrowing, Taiwanese investors are primarily channeling funds into the stock market by liquidating traditional insurance policies and depleting savings accounts. In the first quarter, insurance policy surrenders totaled NT$481.5 billion, a substantial increase of NT$70 billion year-on-year. This suggests a significant shift of capital from conservative savings vehicles to the equities market.

Further evidence of this trend is seen in the doubling of margin financing balances at brokerages to NT$1.25 trillion by the end of May, and record highs in securities deposit balances. This indicates that even traditionally conservative savers are being drawn to the market's potential, with monthly fixed investments in stocks nearing NT$30 billion. The influx of foreign capital and returning Taiwanese businesses also contributed to a record NT$1 trillion increase in bank deposits in April alone, highlighting a broad movement of funds into the financial system.