As U.S. equities have grown increasingly volatile and the S&P 500 has weakened, pressure on global technology stocks has intensified — yet Taiwan's market has held up comparatively well.
For Jeff Chang (張錫), former chairman of Cathay Securities Investment Trust and visiting professor of finance at Tunghai University, the explanation is straightforward: Taiwan remains a critical node in the AI and semiconductor supply chain. The market's relative resilience reflects fundamental support from computing infrastructure investment, corporate earnings growth, and sustained supply-chain demand — not speculative sentiment.
The current turbulence originated in the United States, Chang said, where certain sectors had attracted excessive capital with slower-than-expected returns, amplifying volatility — software stocks in particular.
Taiwan, by contrast, continues to occupy a core position across the AI supply chain, from semiconductors to adjacent components, where demand remains intact. Corporate earnings growth this year has also been reasonable. In that context, Chang argued, any short-term break below the quarterly moving average should be read as a potential entry point rather than a signal of structural deterioration.
Oil prices, inflation, and geopolitical disruption remain persistent irritants, Chang acknowledged, but he characterized these as short-term variables that will ultimately yield to fundamentals.
The dominant investment theme this year remains AI-related sectors — though what AI now represents has expanded beyond capital concentration to encompass industry consolidation and competitive restructuring. Companies that secure positions within the AI supply chain and adapt to shifting technical and demand conditions will be repriced accordingly by capital markets. Those that do not, regardless of stable financials, risk being left behind in both valuation and capital allocation.
Taiwan's Innovation Board: Sound in Design, Stalled in Practice
On the question of Taiwan's Innovation Board underperforming market expectations, Chang was measured but direct. The board's founding intent, he said, is genuinely sound: it provides a pathway into capital markets for companies that have not yet turned a profit but possess technology, vision, and a credible growth narrative.
In plain terms, the Innovation Board was designed to give enterprises "still talking about the future" a stage on which to be seen.
The problem, Chang said, is that sound institutional design and the formation of a positive market cycle are two separate things. The Innovation Board's most immediate structural constraint is insufficient trading volume and liquidity.
For institutional investors, thin volume makes entry impractical. For listed companies, a weak share price combined with declining turnover after listing actively undermines subsequent fundraising and investor relations efforts. The result, despite the board's correct strategic direction, is that it has yet to generate sufficient gravitational pull for the market.
Chang stated the core problem plainly: investors have not yet had the experience of making money on the Innovation Board.
In capital markets, however well-constructed the institutional framework, everything ultimately returns to one practical question — whether a wealth effect can be established. Without actual investor returns, market enthusiasm cannot be sustained. Conversely, if even one or two marquee Innovation Board companies deliver real gains, the entire segment's visibility and sentiment could shift materially.
An Awkward Rivalry With the Emerging Stock Market
Chang also identified why capital has tended to flow toward the Emerging Stock Market (興櫃) instead. The appeal is not simply higher activity levels: the Emerging Stock Market has no daily price movement limits, which allows capital to concentrate rapidly and amplifies both price volatility and speculative momentum.
If the Emerging Stock Market more readily attracts market attention and delivers more dynamic share price performance, the Innovation Board — lacking sufficient volume — is structurally disadvantaged by comparison. This dynamic, Chang observed, has produced a notably awkward competitive and complementary relationship between the two markets.
For the Innovation Board to move forward on credible terms, Chang said, the priority cannot simply be increasing the number of listed companies. What must be addressed is the triad of liquidity, the presence of genuinely representative companies, and investor confidence.
Institutional idealism alone will not resolve the board's trajectory; the market must gradually develop a collective conviction that opportunities to generate returns exist there.
Visibility Must Be Built Before Results Arrive
Alex Lee (李鴻基) offered a complementary perspective, arguing that liquidity is ultimately the market's paramount currency — and that liquidity itself depends on communication and transparency.
Whether on the Innovation Board or the Emerging Stock Market, companies that want to be seen by the market cannot wait until they have results to start telling their story, he said. Recognition must be built earlier, so that investors understand who the company is and where it is headed.
In the AI era especially, Lee argued, the challenge is not a shortage of information but an excess of it. Companies that do not proactively define themselves risk being drowned out by noise and gradually disappearing from market consciousness altogether.
