Amid fears of a US recession and the aftermath of a sudden rate hike from the Bank of Japan that sent global markets into a tailspin last Monday, Taiwan’s equity markets have continued to perform well in 2024. Taiwan’s Stock Exchange Capitalization Weighted Index (Taiex) was still up 23.31% YTD August 2024, having recovered more than 10% since the market rout last week, although still far from its peak in July 2024 when the index was up 36.61%.

The Taiwanese stock market has shown remarkable performance so far this year, with several factors contributing to its success. A primary driver has been the optimism surrounding the artificial intelligence (AI) sector, which has seen significant investment and growth. The island’s largest manufacturing companies which are involved in the AI value chain are doing well, including TSMC and Hon Hai which have experienced a 59.87% and 76.67% increase in their share price respectively since the beginning of 2024.    

Over the past several years, the Taiwan Stock Exchange (TWSE) has strategically focused on expanding market size, innovating products and services, and leading net-zero and sustainability initiatives. These efforts aim to enhance corporate value and attract more domestic and foreign investment, thereby strengthening the overall scale of the island’s capital market. The TWSE has also emphasized enhancing cybersecurity and ensuring investor confidence, which are crucial for the prudent and stable operations of the market.

Furthermore, the TWSE has been driving the development of emerging industries such as digital, green energy, and biotechnology, leveraging the strength of both the main board and the Taiwan Innovation Board (TIB).

Other high-performing Asian markets have recovered slightly. The Nikkei 225, which closed down more than 12% last Monday, its worst day since Japan’s infamous 1987 “Black Monday”, saw shares climb back up by close to 16%. Since the start of the year, the benchmark is up 9.48%.

According to BofA Securities’ recent Asia Fund Managers Survey, eight out of 10 respondents expected to see growth in Japanese equities in the next 12 months, although only 46% expect it to scale a new high. “The headwind around the unwinding of carry trades in recent weeks had made investors laser-focused on FX moves for clues about the trends in equity markets,” states the survey.

India’s Nifty 50, which dropped close to 4% early last week, is still up 11.17% YTD August 2024, while the FTSE Bursa Malaysia KLCI is up 10.67% despite the global sell-off.

Not all equity markets were so fortunate following the market rout last week. The Korean Composite Stock Price Index (Kospi) still has to recover the gains it had generated this year; from a peak of 8.30% in July 2024, the index is -0.95% YTD August 2024.