Taiwan Stock Index Soars 5%... Semiconductor Stocks Like TSMC Rally Strongly

Sharp Rise Following 3% Drop the Previous Day
TSMC, MediaTek and Other Semiconductor Stocks Rebound
Warnings of Instability in Taiwan Stock Market

[Image source=AP Yonhap News]

[Asia Economy Reporter Kim Suhwan] The Taiwan stock index surged about 5% due to the strength of Taiwanese semiconductor stocks.

On the 18th, the Taiwan Weighted Index rose as much as 5% during the session. This marked the largest increase since March of last year. It also more than offset the 3% decline from the previous day.

The sharp rise in the Taiwan stock market is attributed to the strong performance of major semiconductor stocks, including TSMC. TSMC surged up to 4.2% during the session, while another semiconductor company, MediaTek, jumped as much as 8.5%.

Recently, there have been signs of a spread of local COVID-19 infections within Taiwan, raising concerns that Taiwan's economic recovery could be further delayed. As a result, the Taiwan stock market has fallen nearly 10% since last month.

However, as the Taiwan stock market declined, foreign investors increased their buying on dips, pouring in $1.2 billion on the day the market fell. This amount is the highest foreign investment since April 2015.

Nevertheless, experts are warning about the instability of the Taiwan stock market. Among major stock markets tracked by Bloomberg, Taiwan's market was one of the most volatile, with a 10-day volatility reaching its highest level in a year. Additionally, Morgan Stanley has stated that the Taiwan stock market is overvalued and has advised investors to reduce their exposure to Taiwan stocks.