After Taiwan stocks reached new highs, they rapidly plunged; Cai Minghan: The divergence from the Nasdaq 500 is too high, so it is entirely reasonable to consolidate and take a rest.

Today (4/23), Taiwan Semiconductor Manufacturing Co. (2330) hit a new high of 2,135 yuan, lifting the Taiwan stock market to a new record of 38,921 points. However, during the session, international geopolitical news increased risk-averse sentiment. After the market surged to highs, it rapidly sold off; the intraday range swung by more than 1,700 points. It ultimately closed at 37,714 points, down 0.43%. The listed trading volume exceeded 1.4 trillion yuan, the largest on record. Senior Taiwan stock analyst Ming-Han Tsai said that the divergence rate between the Taiwan stock market and the PHL/US Nasdaq 100 index has reached near the highest level in recent years, making it “very reasonable” for the market to enter a rest-and-consolidation period.

TSMC leads the Taiwan stock market to new highs, then plunges

In the early session today, TSMC (2330) set a new high of NT$2,135, driving the broader market up to the historical high of 38,921 points. Afterwards, geopolitical risks rose after the U.S. State Department urged citizens to leave certain parts of the Middle East. The news sparked demand for hedging, causing the index to drop quickly; the high-low swing for the entire day reached as much as 1,700 points. Ultimately, the weighted index closed at 37,714 points, down 0.43%. Today’s listed trading volume exceeded 1.4 trillion yuan to set a new historical record, showing that the bulls and bears are clearly divided.

(Geopolitical situation in the Middle East escalating? U.S. State Department urgently urges citizens: Leave Iran and Lebanon immediately)

Ming-Han Tsai: The divergence between the Taiwan stock market and PHL is too high; consolidation and rest are very reasonable

Regarding today’s record-high trading volume of 1.4 trillion yuan, senior Taiwan stock analyst Ming-Han Tsai said this is the result of a “full mobilization” by the market. Currently, the divergence rate between the Taiwan stock market and the PHL/US Nasdaq 100 index has reached the highest point in recent years. The market has entered a rest-and-consolidation period, and it is “very reasonable.”

Tsai analyzed that the Taiwan stock market’s fundamentals are strong to begin with. As the Middle East risk calms down, market pressure “bursts out” like a lid being lifted. But after the excitement, it must return to reality. He specifically pointed out a warning: the “divergence rate” between the Taiwan stock market and the Philadelphia Semiconductor Index versus the monthly moving line is currently at the highest level in recent years. The last time such an extreme divergence rate appeared was in mid-May of last year. At that time, after the market went through the low point in April, it surged relentlessly. It ultimately reached the peak divergence rate in May, and then shifted into consolidation.

This article, “After hitting new highs, Taiwan stocks plunge rapidly; Ming-Han Tsai: Divergence with PHL is too high; consolidation and rest are very reasonable,” first appeared on Lianxin News ABMedia.