Tsai Ming-Chang Warns Over Valuations in Taiwan Stocks

Taiwan’s benchmark index experienced a sharp rebound following the Mid-Autumn Festival holidays, fueled by a major policy shift from Washington regarding artificial intelligence. While major weighted stocks rallied on the news, Tsai Ming-chang is raising alarms over surging bond yields, impending memory sector reports, and overstretched valuations across key equities.

The recent market surge followed a White House announcement where U.S. President Donald Trump invited six major AI industry leaders to sign a self-regulatory pact known as the White House Accord on Super Intelligence. Alongside the agreement, Trump signed an executive order officially recategorized artificial intelligence as “Superintelligence” (SI). Tsai noted that the administration views the rapid expansion of data centers nationwide as a core political achievement, opting for non-binding moral standards and corporate self-governance over stringent federal legislation.

According to Tsai Ming-chang, this regulatory relief sparked immediate enthusiasm among hardware-heavy suppliers in Taiwan. However, Tsai pointed out that South Korea’s equity market—another major hub for AI hardware manufacturing—did not exhibit the same speculative fervor, signaling potential overreaction and short-term speculative characteristics within Taiwan’s market.

Macroeconomic Pressures and Rising Yields

Beneath the policy-driven optimism, broader macroeconomic headwinds continue to loom over global equities. Tsai emphasized that the ongoing rally faces substantial pressure from surging U.S. Treasury yields. Driven in part by intense infrastructure build-outs and technology-related inflation, the 30-year U.S. Treasury yield recently climbed toward 5.62%, marking a 24-year high.

This persistent upward pressure on yields is tied to several converging economic forces. Stalled international geopolitical negotiations have kept oil and fuel prices elevated, reigniting inflation expectations. Simultaneously, heavy corporate debt issuance—exemplified by Paramount’s multibillion-dollar bond offering to fund the acquisition of Warner Bros.—has crowded out demand for government debt, forcing yields higher to attract capital.

Additional strain stems from foreign exchange dynamics. Despite the Bank of Japan’s recent interest rate hikes, the Japanese yen remains under pressure, prompting authorities to liquidate holdings of U.S. Treasuries to defend the currency. Compounding these factors is historical seasonality, as September and October frequently bring downward corrections to the U.S. bond market.

Memory Sector Earnings and Valuation Risks

Market attention has also turned toward upcoming corporate earnings from major global memory manufacturer Micron. While analysts have projected robust quarterly revenue exceeding $50 billion alongside gross margins approaching 86%, observers have drawn comparisons to Micron’s previous earnings report released on June 24. During that period, stellar financial results drove a temporary surge in share price before facing subsequent market recalibrations.

As the broader market weighs these fundamental developments against elevated share valuations, analysts continue to monitor how upcoming economic data releases and institutional positioning will shape the direction of technology-heavy equities moving forward.