Taiwan’s benchmark stock index is on track to reach its highest level since April 2022 as the artificial intelligence sector gains traction and foreign investors make a comeback.

Taipei Stock Exchange on the Rise as AI Gains Momentum and Foreign Investors Return

The TWSE (Taipei Stock Exchange) Index, also known as the Taiex, surged by up to 1.2% on Tuesday, with major chipmakers Taiwan Semiconductor Manufacturing Co. (TSMC) and MediaTek Inc. leading the way. So far this year, the index has climbed by 23%, outperforming the MSCI Asia Pacific Index, which recorded a 4.9% gain.

TSMC, which serves as Nvidia Corp’s primary foundry, is Taiwan’s largest publicly traded company and has been the driving force behind the Taiex’s impressive performance this year. Thanks to signs that the semiconductor industry is rebounding and the continued growth of AI, TSMC’s shares have risen by over 10% this month alone. On Tuesday, TSMC’s stock price increased in response to positive developments among other AI-related companies, ahead of Nvidia’s upcoming financial results.

Furthermore, foreign investors have recently been injecting capital into the Taiwanese market, resulting in three consecutive weeks of net stock purchases, a notable reversal from four straight months of outflows. The rally in Taiwanese equities gained momentum in November, supported by global optimism surrounding technology stocks, as investors wager that the Federal Reserve is nearing the end of its tightening monetary policy.

„The potential conclusion of the Fed rate-hike cycle and a weaker dollar work in favor of the tech-heavy market by reducing interest-rate risks,“ explains Marvin Chen, a strategist at Bloomberg Intelligence.

FAQ:
Q: What is the TWSE Index?
A: The TWSE Index, or Taiex, is Taiwan’s benchmark stock gauge.

Q: Which companies played a crucial role in the Taiex’s recent upswing?
A: Chipmakers Taiwan Semiconductor Manufacturing Co. (TSMC) and MediaTek Inc. were the primary contributors.

Q: Why did TSMC’s stock price rise?
A: TSMC has experienced significant growth due to positive signals from the semiconductor industry and the ongoing expansion of artificial intelligence.

Q: Are foreign investors returning to the Taiwanese market?
A: Yes, foreign investors have been buying Taiwanese stocks on a net basis for three consecutive weeks after several months of outflows.

Q: What factors have contributed to the recent gains in Taiwanese equities?
A: The rally in Taiwanese equities can be attributed to the positive outlook for technology stocks worldwide, assuming the Federal Reserve is nearing the end of its monetary tightening policy.