Taiwan Stock Rebound May Be a Trap: Investors Warn of Another Sharp Drop

Taiwan's stock market experienced a severe selloff on Friday, with the Taiex index plunging as much as 3,737 points intraday, breaching its annual moving average and sending TSMC shares to a limit-down. The National Stabilization Fund announced intervention, lifting futures and TSMC ADRs, but investors remain cautious about Monday's rebound. Financial expert Ruan Mu-hua noted the fund's entry, a 4% rebound in the Philadelphia Semiconductor Index, and a 6% surge in TSMC ADRs, questioning the appropriate gain for TSMC on Monday. Online commentators predicted a "rise-then-fall" scenario, warning of another long black candlestick on Tuesday due to potential forced selling. Investors also highlighted nearly 100,000 open foreign institutional futures short positions and a lack of significant capital inflows into the New Taiwan dollar as bearish indicators. Some noted that many small and mid-cap stocks have already fallen to levels corresponding to a Taiex index of 25,000, with recent index gains driven mainly by large-cap stocks.