A Historic Snap-Back
The TAIEX surged 7.98% on Friday to close at 43,119.75, a gain of roughly 3,186 points from Thursday’s close of 39,933.30 — a session that had left the index below the 40,000 mark. The rebound recovers a large part of the 4,917.51 points (nearly 11%) shed over the previous five sessions, though July as a whole remains one of the steepest monthly corrections on record, with point declines exceeding 6,000 before Friday’s recovery.
The trigger was external. Overnight, the Philadelphia Semiconductor Index jumped 8.19% to 11,302.99 on upbeat earnings, and the S&P 500 rose 1.66% to 7,437.63. With TSMC alone accounting for over 40% of Taiwan’s market capitalization, the pass-through was immediate and violent. S&P 500 futures stayed modestly firmer through Taipei hours, up 0.28% at 7,493.50, keeping the bid intact into the 13:30 close.
Institutional Flows: Foreign Money Returns in Size
- Foreign investors: net BUY NT$67.55 billion
- Investment trusts: net buy NT$33.38 billion
- Dealers (proprietary + hedge): net sell NT$16.26 billion
- Three institutions combined: net buy NT$84.68 billion
After a stretch of heavy foreign liquidation — including a single-day net sale of NT$189.04 billion on July 17 — Friday’s NT$67.55 billion of net foreign buying is the clearest sign yet that the selling phase has at least paused. Investment trusts bought alongside. Dealers were the only net sellers, consistent with proprietary desks fading strength or unwinding hedges into it. Retail, meanwhile, has been notably active through the correction, with reports of record odd-lot buying as smaller investors averaged in; the National Stabilization Fund has been monitoring the market all week without visible intervention being required on Friday.
Semis Lead, Everything Follows
| Stock | Close (NT$) | Change |
|---|---|---|
| TSMC (2330) | 2,425.00 | +9.98% |
| MediaTek (2454) | 3,555.00 | +9.89% |
| UMC (2303) | 121.00 | +10.00% |
| Hon Hai (2317) | 250.50 | +9.15% |
UMC finished at the 10% daily limit, with TSMC and MediaTek within a whisker of theirs. The TWSE Semiconductor sub-index gained 9.81%. The rally was broad but not uniform: Financials & Insurance rose 4.45% while Shipping added just 1.95% — a chip-led, foreign-flow-led move rather than an indiscriminate melt-up. For reference, the sell-off had left TSMC at 29.65x earnings and Hon Hai at 16.30x with a 3.12% yield as of Thursday’s close.
Positioning Into the Rally (Thursday’s Data)
Derivatives and leverage figures for Friday are not yet published; the latest official data describes positioning as of Thursday, July 30 — the setup entering today’s session, not today’s activity.
- Foreign investors’ TAIEX futures (TX) net open interest stood at -81,017 contracts, a heavily net-short book entering Friday (Thursday’s net volume was a modest +1,781 contracts).
- The options put/call ratio was 79.43% on open interest (92.59% on volume) as of Thursday.
- Market-wide margin loans — the retail leveraged-long channel — fell NT$13.14 billion to NT$493.9 billion on Thursday, showing retail deleveraging into the low. TSMC’s margin balance edged down 168 lots, though UMC margin longs actually grew (+2,523 lots).
- Retail margin shorts were being covered in UMC (-4,783 lots) and TSMC (-100 lots) on Thursday.
- The institutional short channel — SBL borrowed balances, distinct from retail margin shorts — told a different story: balances rose in 695 issues versus falls in 246. Hon Hai’s SBL balance jumped 14.71 million shares and TSMC’s rose 1.31 million, meaning institutions were still adding shorts into Thursday’s weakness.
Whether that short base supplied extra fuel to Friday’s move can only be confirmed once TAIFEX and SBL data for July 31 are released.
ADRs and the Currency
TSMC’s US-listed ADR closed the prior US session at $403.31, which works out to roughly a 7.5% premium over Friday’s Taipei close on the 5:1 ratio. The ADRs habitually carry a structural premium over Taipei of roughly 15-25%, so the interesting point is not the premium’s existence but its compression: Friday’s near-limit move in Taipei closed much of the gap the ADRs had opened with their overnight surge. The two prices come from different sessions, so read the change in the gap, not its level. The currency barely registered the drama — USD/TWD closed at 32.33, down 0.07%, so Friday’s foreign equity buying was not accompanied by a visible Taiwan dollar move.
What to Watch
- Friday’s TAIFEX positioning, once published: whether foreign futures net open interest closes meaningfully from -81,017 contracts would confirm the cash-market buying is more than a hedged bounce.
- Foreign flow follow-through: one day of NT$67.55 billion buying after a NT$189.04 billion single-day sale earlier in July does not settle the trend.
- SBL balances in Hon Hai and TSMC: whether Thursday’s institutional short additions get covered into strength or pressed further.
Disclaimer: This is an information and analysis publication, not investment advice. See our Methodology for data sources, standards, and our corrections policy.