The recent surge of the Taiwan dollar, fueled by strong foreign capital inflows, poses significant challenges to Taiwan's export-oriented industries, particularly technology and the stock market. As of March 31, the exchange rate was 33.182, dropping to 31.139 by May 2, reflecting an appreciation of 6.2%, which could impact Q2 stock profits by approximately 3.35%.

Overall, a 1% appreciation of the Taiwan dollar is estimated to reduce pre-tax profits in the stock market by about 0.5%. TSMC's operating margin is expected to decline by 0.4%, while OEM and ODM manufacturers may see a 0.2% drop. According to Fubon Investment Consulting, while some companies implement natural hedging measures, overall profits remain sensitive to exchange rate fluctuations.

For electronic stocks, which are export-driven, the appreciation of the Taiwan dollar is expected to have a detrimental impact on profits. Fubon estimates that a 1% increase in the Taiwan dollar will reduce TSMC's operating margin by 0.4%. On the other hand, for OEM/ODM manufacturers, most receivables and payables are naturally hedged, so a 1% appreciation of the Taiwan dollar is likely to impact operating margins by about 0.2%. Traditional industries also face negative effects from the appreciation of the Taiwan dollar, with operating margin impacts in the range of 0.1% to 0.3%.

In the financial sector, the appreciation of the Taiwan dollar poses a negative impact on hedging costs. If the Taiwan dollar appreciates by 1% against the U.S. dollar, the profit of National Life will decrease by NT$7.6 billion and net worth by NT$4.8 billion; Taiwan Life's earnings will drop by NT$3.1 billion, with net worth reduced by NT$1.4 billion. While many Taiwanese industries suffer from the appreciation of the Taiwan dollar, there are also stocks that may benefit from this trend.

Historically, food stocks tend to gain from foreign exchange profits during periods of Taiwan dollar appreciation, which can positively affect their stock prices. Additionally, asset-related stocks are also likely to be favorably interpreted in the context of significant Taiwan dollar appreciation.