Inflation Fears May Push Taiwan Stocks to Test 40,000-Point Support, Say Analysts

(CNA, Taipei, May 20, by reporter Tseng Jen-kai) Amid rising U.S. bond yields and NVIDIA's imminent earnings announcement, market volatility has intensified. TAIEX futures continued their decline in the after-hours session, falling 100 points to close at 40,140. Institutional investors are worried about inflation and the still-large deviation in Taiwan stocks, leading to short-term correction pressure with a potential retest of the 40,000-point support level, though the long-term upward trend remains intact. U.S. Treasury yields continued to rise, with the 30-year Treasury yield touching 5.19% intraday on Tuesday, a 19-year high. The market fears that a resurgence of inflation could trigger interest rate hikes, which would impact stock valuations and lead to selling pressure on U.S. stocks. On the 19th, major U.S. indices mostly closed in the red. The Dow Jones Industrial Average fell 322.24 points (0.65%) to close at 49,363.88. The S&P 500 index dropped 49.44 points (0.67%) to 7,353.61. The tech-heavy Nasdaq Composite slid 220.02 points (0.84%) to 25,870.71. The Philadelphia Semiconductor Index edged up slightly by 2.98 points (0.03%) to 11,305.50. In individual stocks, with NVIDIA set to release its earnings after the market closes on May 20th U.S. Eastern Time, the market adopted a wait-and-see approach. NVIDIA's stock fell $1.71 (0.77%) to close at $220.61 on Tuesday. Intel rose $2.63 (2.43%) to $110.8; Micron gained $17.2 (2.52%) to $698.74; and TSMC's ADR fell $3.34 (0.84%) to $392.61. Lou Ke-wang, Vice President of the Investment Strategy Department at Nomura Asset Management, believes that AI has evolved from a single theme into a core driver for global industrial upgrading, creating a structural long-term growth trend for related sectors like semiconductors, electronic components, servers, and networking. He noted that Taiwan, with its complete supply chain and technological leadership, holds a key position in global AI development, and his long-term bullish view on Taiwan stocks remains unchanged. However, Lou also reminded investors to be wary of unresolved geopolitical risks in the Middle East and the potential for inflation expectations to squeeze the room for major central banks to cut rates, affecting global capital flows and market valuations. He also suggested that with the rapid rotation of short-term capital, investors should avoid chasing highs excessively and look for entry opportunities with support after pullbacks and consolidation. (Editor: Yang Kai-hsiang) 1150520