The appreciation of the New Taiwan dollar has led to an influx of hot money from foreign investors into the Taiwan stock market, prompting investors to follow their lead. In April and May, foreign investments primarily focused on large-cap stocks, particularly in the electronics sector. According to analyst Sun Chia-Ming from National Securities, after the New Taiwan dollar broke the 30 NT$ mark, major stocks and large-cap electronics have begun to see a slowdown in growth, entering a phase of high-level consolidation as some hot money shifts towards non-life insurance and bank holding companies like Yongfeng Financial and First Financial.

However, Sun warns against investing in large life insurance stocks and machinery sectors, which are expected to face significant foreign exchange losses in their second quarter reports. Despite the fluctuating US trade policies, the inflow of foreign funds into Taiwan’s stock market continues, particularly benefiting semiconductor and electronics-related stocks such as TSMC, Quanta, and Foxconn, although many of these have already seen substantial rebounds.

He also added that with the release of second-quarter earnings reports, foreign funds are likely to move towards asset stocks that have land holdings, primarily for value preservation. Investors are advised to keep pace with foreign investments while avoiding life insurance and machinery stocks that may incur significant foreign exchange losses.