Encouraged by the surge in US stocks, the Taiwan stock market rebounded by 552.61 points on Friday, an impressive 2.73% increase, bringing the index to 20,787.64 points. For the week, the Taiwan stock market closed with a significant gain of 914.91 points, representing a 4.6% rise. Experts recommend focusing on stock selection rather than the overall market. Stocks with deep declines may be suitable for short-term rebound trades, and technology stocks should focus on key players in the 2nm supply chain, edge computing, memory, optical communication, and other relevant fields, while traditional industries include long-term trend stocks benefiting from MAGA policies, such as aerospace, heavy electric machinery, industrial automation, biotechnology, and finance.

In terms of institutional funds, foreign capital has been on the buying side for two consecutive weeks, with a substantial weekly buyback amounting to 52.364 billion NTD. Meanwhile, domestic funds have also continued to increase their net purchases for the ninth consecutive week, adding 3.299 billion NTD this week. The only sector adjusting its positions has been proprietary traders, who have reduced their holdings by 9.954 billion NTD for the 10th consecutive week. The three major institutions collectively bought a net total of 45.709 billion NTD. According to Du Xin-Pei, portfolio manager of the PGIM Prudential Small Cap Fund, the Taiwan stock market has rebounded nearly 3000 points since its sharp drop of 3000 points in April. The recent softening of the US-China tariff conflicts and ongoing adjustments in the tech sector are contributing factors supporting this rebound.

However, he notes that the transaction volume has shown a significant decline, suggesting that while short-term rebounds may continue, market pressures still need to be monitored. Additionally, while foreign investors heavily sold Taiwan stocks in April, returning to the market in the past two weeks, it remains to be seen if this buying momentum can sustain. The liquidity in the market has decreased notably, with the margin balance dropping back to levels not seen since the end of 2023. Du Xin-Pei also pointed out that although the investment atmosphere has not fully stabilized, recent positive disclosures from major cloud companies have boosted confidence in the supply chain. Companies like Meta have increased their 2025 capital expenditure forecasts to between $64 billion and $72 billion, and Microsoft reported a year-on-year revenue increase of 13% to $70.07 billion for the third quarter of the 2025 fiscal year, both of which are expected to benefit Taiwanese tech stocks.

Lastly, he emphasizes the importance of stock selection, encouraging investors to closely monitor market trends to mitigate investment risks.