Taiwan's stock market has once again broken historical records! Today (27th), the index surged by over 1,000 points during trading, breaking through the 40,000-point mark. The index reached a high of 40,092.31 points during the session, with market sentiment extremely active. It ultimately closed at 39,616.63 points.
Looking back at recent trends, Taiwan's stock market has been consistently strong since the beginning of the year. After surpassing 30,000 points on January 5th, it steadily climbed, breaking through 35,000 points on April 10th. Now, only about 18 trading days later, it has crossed the 40,000-point mark again, setting a record for the shortest time to break through the 10,000-point level in history. The speed of the rise has attracted significant market attention.
The index is accelerating its upward climb, with the intervals between 10,000-point breakthroughs significantly shortening.
Historically, it took the Taiwan stock market approximately 538 days to climb from 20,000 to 25,000 points, but this pace has accelerated noticeably in recent years. After reaching 30,000 points, bullish momentum has further amplified. The intervals between reaching 35,000 and then 40,000 points have been continuously shortening, indicating a significant increase in market liquidity and market enthusiasm. The breakthrough from 35,000 to 40,000 points was completed in just 18 days, a rare and rapid surge.
Investment sentiment is heating up. The financial Facebook page "Gu Tian Le: New Perspectives on the Stock Market" points out that as early as mid-2024, when the market was still at 21,000 points, they predicted that the Taiwan stock market had a chance to challenge 30,000 points, which was met with skepticism at the time. However, by early 2026, when they mentioned 40,000 points again, the market reaction had shifted to "perhaps too conservative, with some even predicting 50,000 points," indicating a significant change in market sentiment.
Taiwan's Stock Market Cap Surpasses UK's; AI Demand a Key Driver
Foreign media analysis points out that Taiwan's total stock market capitalization has reached approximately US$4.3 trillion, surpassing that of the UK stock market. However, Taiwan's GDP remains far lower than that of the UK, creating a significant gap.
Analysts believe this structural difference primarily stems from the growth of technology stocks driven by the explosive demand for AI chips. TSMC, accounting for approximately 40% of Taiwan's stock market capitalization, with a market capitalization approaching US$2 trillion, has become the market's most important pillar.
TSMC's recent financial report shows that its first-quarter net profit increased by over 40% year-on-year, and it raised its full-year revenue outlook to over 30% growth. Simultaneously, it continues to expand its 3-nanometer capacity to meet the rapidly increasing demand for AI chips. The company also predicts that AI demand will continue to expand until 2027, potentially even exceeding supply capacity.
Analysts Warn of High-Level Risks; Short-Term Overheating Emerges
With the Taiwan stock market surpassing 40,000 points, some market analysts are warning investors to be aware of the risks of short-term overheating. Analyst Lin Hsin-fu pointed out on his Facebook page that the recent surge has been too rapid, coupled with a significant daily increase in margin trading balances and robust fundraising for actively managed ETFs, indicating a clear warming of market sentiment.
He observed three noteworthy phenomena in the market: the unprecedented magnitude of the short-term price surge, the large daily increase in margin trading, and the high level of activity in new fund raising. These could all indicate that the market has entered a short-term overheating phase.
Investment Strategies Shift Towards Conservatism; Phased Adjustments Recommended
Regarding investment strategies, Lin Hsin-fu suggests avoiding chasing highs when the index is at historically high levels and adopting a wait-and-see approach, reducing new positions. For existing ETF positions with returns of 20% to 30%, continued holding is recommended. However, for individual stocks with excessive short-term gains, moderate adjustments are advised, based on fundamentals and valuation ranges.
As for the medium- to long-term outlook, he maintains a bullish view on the Taiwan stock market and believes that future pullbacks may present better entry opportunities, especially given the long-term growth potential of heavyweight stocks.
