Taiwan’s stock market heads into the third week of December with momentum still intact—but with more cross-currents than the index’s steady climb might suggest. The Taiwan Capitalization Weighted Stock Index (TAIEX) ended Friday, Dec. 12 at 28,198.02, extending its third consecutive weekly gain. [1]
Yet the path to that close was anything but smooth: the index set a record intraday high of 28,568.02 before a sharp pullback midweek, highlighting how quickly “AI optimism” can turn into profit-taking when positioning is crowded and year-end liquidity thins. [2]
With markets closed over the weekend (Dec. 13–14), investors now pivot to a packed agenda for Dec. 15–19—including Taiwan’s central bank meeting on Thursday, Dec. 18, a key gauge of how policymakers view growth, inflation and currency stability as the AI-led export boom continues. [3]
What happened on TWSE last week: a five-session story of AI, memory and rotation
The week of Dec. 8–12 delivered a clear message: Taiwan’s bull case remains anchored in the global AI buildout, but leadership is broadening—and volatility is rising.
Monday (Dec. 8): TAIEX jumps back above 28,000 on TSMC and CoWoS momentum
TAIEX surged +322.89 points to 28,303.78, with heavy buying in TSMC and packaging-linked names tied to CoWoS demand. [4]
That session captured a core theme: advanced packaging capacity is now viewed as a bottleneck—and a profit pool. As attention shifted from “chip volumes” to “chip packaging throughput,” the market rewarded both leaders and the second-line ecosystem. [5]
Tuesday (Dec. 9): cautious dip as traders looked ahead to the Fed
TAIEX slipped -121.18 points to 28,182.60, with large-cap tech softer while memory names dominated turnover—a pattern that repeated throughout the week. [6]
Wednesday (Dec. 10): AI infrastructure and high-priced shares lift the index again
TAIEX rebounded +218.13 points to 28,400.73 as AI-linked and high-priced shares strengthened ahead of the U.S. rate decision. [7]
Thursday (Dec. 11): record high, then reversal—profit-taking hits electronics
In one of the week’s most important signals for short-term traders, TAIEX hit a record intraday high (28,568.02) before closing down 375.98 points at 28,024.75. [8]
Local reporting attributed the reversal to a mix of profit-taking after a strong run, plus heavyweight pressure as electronics weakened. The move underscored how sensitive the index is to a handful of mega-caps—particularly when TSMC is in focus. [9]
Friday (Dec. 12): financials take the baton and TAIEX posts a third straight weekly gain
TAIEX recovered +173.27 points to finish at 28,198.02, and closed +217.13 points higher on the week, as financial shares provided key support and the financial subindex hit a historic high. [10]
The takeaway going into next week: Taiwan’s rally is no longer “TSMC-only.” Market breadth improved, with analysts pointing to rotation from electronics toward financials and theme baskets—including memory and even space/satellite-related names—as traders searched for the next leg of performance. [11]
The big fundamentals behind Taiwan stocks: exports are surging, AI demand is real
While the daily tape has been choppy, the macro backdrop has strengthened.
Taiwan’s November exports surged 56% year-on-year to a record US$64.05 billion, the fastest growth rate in roughly 15½ years, driven by strong demand for chips and AI-related technologies. [12]
Reuters also reported Taiwan’s Finance Ministry expects December exports to rise 40%–45% year-on-year, reinforcing the idea that the AI hardware cycle is still accelerating into year-end. [13]
For equity investors, this matters because it supports a “fundamentals-first” narrative: earnings and orders—not just sentiment—are helping justify higher index levels.
Advanced packaging becomes the new battleground: “TSMC-like” supply chains scale up
A critical development during Dec. 8–14 was the market’s renewed fixation on advanced packaging capacity—especially CoWoS.
Taiwan reporting highlighted how an ecosystem of packaging firms is expanding lines designed to meet TSMC-level requirements, as demand for AI processors pushes advanced packaging utilization toward the limit. [14]
Industry estimates cited in the same reporting suggest TSMC currently handles roughly 75,000–80,000 wafers per month and aims to raise capacity to 120,000–130,000 wafers by the end of next year—yet analysts warn even that may not fully meet orders from major chip designers. [15]
The market implication for the week ahead is straightforward: if CoWoS and related processes remain tight, investors may continue to bid up the “picks and shovels”—OSATs, materials, and equipment suppliers—alongside headline chip names.
Foreign flows vs. domestic conviction: a defining tension for 2026
One of the most important strategic signals from this news cycle is that Taiwan’s rally is increasingly described as domestically supported, even as foreign investors remain selective.
Reuters reported Taiwan’s benchmark index has risen strongly in 2025 and that foreign investors have sold a net T$533.8 billion (about US$17 billion) of Taiwanese shares so far this year, following large net outflows in 2024. [16]
At the regional level, Reuters also noted that foreign investors pulled heavily from Asian equities in November amid valuation concerns tied to the tech/AI trade, with Taiwan and South Korea among the hardest hit. [17]
For the week ahead, this sets up a key watchpoint: does year-end window dressing and improving macro data pull foreign flows back, or do global investors continue trimming exposure into 2026 despite strong Taiwan fundamentals?
Forecasts and market targets: 30,000? 35,000? The gap is the story
During Dec. 8–14, headline forecasts diverged—but stayed bullish.
The “30,000” camp: record highs fueled by structural AI demand
Reuters reported investors and strategists see Taiwan’s benchmark index poised to breach 30,000 points in 2026, arguing that Taiwan sits at the heart of both GPU and TPU supply chains—meaning even competition within AI compute could still benefit Taiwanese manufacturers. [18]
The “toward 35,000” camp: advisory firms lean into the AI expansion thesis
Taipei Times (citing CNA) reported five major advisory firms expect the TAIEX could approach 35,000 points next year, with one of the most optimistic calls at 34,988, and noted the top AI-linked heavyweights account for a majority share of market capitalization. [19]
Rather than treating these as “price targets,” investors should read them as signals about consensus: Taiwan’s market remains priced as an AI supply-chain proxy, and forecasters see demand broadening from servers into edge AI devices—potentially sustaining earnings visibility. [20]
Week ahead calendar: the catalysts that matter on Dec. 15–19, 2025
1) Taiwan central bank decision — Thursday, Dec. 18
Taiwan’s central bank is scheduled to hold its quarterly Monetary Policy Meeting on Dec. 18. [21]
ING’s regional “week ahead” preview said markets and economists broadly expect the central bank to hold the benchmark rate unchanged at 2.0%, citing steady growth and sensitivity around TWD stability. [22]
Why this matters for TWSE:
- A hold could keep financial conditions supportive while preventing FX volatility that might spook foreign flows.
- Any shift in guidance (more hawkish on inflation or more dovish on growth) could quickly reprice banks, insurers, and high-duration tech.
2) Micron earnings: a direct read-through to Taiwan’s memory complex
Local Taiwan market reporting flagged Micron’s upcoming earnings as a key event that could shape sentiment toward the memory sector and Taiwan-linked names. [23]
Memory has already been a major turnover driver in recent sessions, with traders focused on price recovery and inventory stabilization themes. [24]
3) Global rate signals and year-end liquidity
Markets remain sensitive to global central bank guidance and liquidity conditions into the final two full weeks of December. Reuters reported the U.S. Federal Reserve began buying short-dated Treasury bills again in early December—an operational shift that investors often interpret through the lens of year-end funding and liquidity dynamics. [25]
For Taiwan specifically: global yields and USD strength/weakness feed directly into foreign allocation decisions and risk appetite toward tech-heavy indices.
Sectors and themes to watch on TWSE next week
Financials: the rotation trade is now visible in index performance
Friday’s session showed financials can still move the needle, with the financial subindex at a historic high and analysts noting rotation from electronics into financial stocks. [26]
What could keep the bid alive:
- A steady-rate outcome from Taiwan’s central bank
- Year-end positioning and dividend/valuation screens
Memory and semiconductors: supported by pricing narratives and AI spillovers
The week’s reporting repeatedly emphasized memory strength and rising memory-chip pricing, with Taiwan’s memory names often topping trading volumes. [27]
Micron’s results and guidance could act as the next “macro print” for this trade.
Advanced packaging, CoWoS, and second-line AI supply chain
Capacity expansion and outsourcing narratives continue to support the ecosystem beyond TSMC itself. [28]
This is crucial for market breadth: when second-line suppliers lead, the rally tends to look healthier—and pullbacks may be shallower.
“Theme” baskets: CPO/optics, chemicals, and even space-linked names
Thursday’s pullback showed an important pattern: even when mega-cap electronics faded, smaller thematic groups held up better, supporting the argument that the broader uptrend has not broken. [29]
Risk checklist: what could derail the week-ahead setup?
- AI valuation anxiety returns abruptly. Reuters noted ongoing debate over “AI bubble” risk globally, even as many Taiwan-focused investors argue earnings support and structural demand reduce bubble parallels. [30]
- Foreign selling accelerates into year-end. Regional flow data remains a swing factor for Taiwan and other tech-heavy Asian markets. [31]
- Tech IP and regulatory headlines. The Financial Times reported Taiwan has launched investigations into suspected leaks and trade-secret theft in the semiconductor sector, a reminder that geopolitical and national-security considerations can spill into market sentiment. [32]
- Mega-cap concentration risk. With TSMC representing an outsized share of index influence, sharp single-stock moves can dominate the headline tape. [33]
Bottom line for Dec. 15–19: momentum remains, but expect headline-driven volatility
The TAIEX enters the week ahead with strong underlying support from AI-led exports and a deepening advanced-packaging investment cycle, but also with an increasingly “event-driven” profile: Taiwan’s central bank decision, Micron earnings, and shifting global rate expectations are all poised to set the tone.
If financials continue to absorb rotation flows while AI supply-chain breadth remains strong, Taiwan stocks could extend the year-end rally. If not, the record intraday reversal from Thursday is a timely reminder that even in a bullish regime, the market can correct fast when profit-taking meets crowded positioning. [34]
References
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