AI-Driven Chip Rally Pushes Taiwan Stock Index to 19-Month High

According to Yahoo News, Taiwan's benchmark stock index, the TWSE Index or Taiex, reached its highest closing level since April 2022, driven by the resurgence of the artificial intelligence (AI) theme and the return of foreign investors. Chipmakers Taiwan Semiconductor Manufacturing Co. (TSMC) and MediaTek Inc. were the largest contributors to the 1.2% increase on Tuesday. The index has risen 23% this year, compared to a 4.5% gain in the MSCI Asia Pacific Index of regional peers. TSMC, the primary foundry used by Nvidia Corp., is Taiwan's largest stock and accounts for over a third of the Taiex's rise this year. Indications that the broader semiconductor industry is bottoming out, along with the continued boom in AI, have pushed the company's shares up about 11% this month alone. The stock climbed Tuesday, along with other AI names, ahead of Nvidia's results. Foreign investors have recently supported the market, purchasing Taiwan's stocks on a net basis for three consecutive weeks. This marked a turnaround after four straight months of outflows. Taiwan equities resumed gains in November, as tech stocks worldwide have benefited from expectations that the Federal Reserve is nearing the end of its monetary policy tightening campaign. Marvin Chen, a strategist at Bloomberg Intelligence, stated that the potential end to the Fed rate-hike cycle and a weaker dollar benefit the tech-heavy market as interest-rate risks decrease.