Current Fund Situation:
LHTWGHD has delivered a return of +8.98% over the past three months (as of July 2, 2025). The Taiwan stock market has been supported by a rebound in US technology stocks after geopolitical risks in the Middle East eased, boosting investor confidence. In addition, the positive sentiment toward US AI megatrend stocks — driven by themes such as hyperscaler initiatives, government Sovereign AI programs, and the expansion of enterprise-scale AI infrastructure. As a result, Taiwanese technology stocks have also seen strong momentum.
Market Outlook:
Taiwan’s stock market continues to be supported by its economy, particularly strong technology exports and sustained AI-related demand. The economic outlook for 2025 is expected to grow further, helped by the Fed monetary easing policy which are closely linked to Taiwan’s economy. In May 2025, Taiwan’s industrial production grew by +22.6% YoY, only slightly easing from the previous month but still near its highest level since February 2020. Meanwhile, export orders in May rose +18.5% YoY to USD 57.9 billion, marking the highest level in over two years.
Additionally, the continued appreciating of the New Taiwan Dollar (TWD) against the US Dollar has encouraged foreign equity inflows. Foreign institutional investors (QFIIs) have ramped up net purchases of Taiwanese technology stocks, totaling over USD 15 billion since mid-April. Taiwan ETFs, both dividend-focused and growth-focused, have also seen steady inflows of around USD 850 million per week on average over the past three months. These strong foreign flows have supported a sharp recovery in hardware stocks, which have rebounded over 40% from their April lows.
Overall, we see further upside potential in the Taiwan stock market, underpinned by its solid long-term fundamentals. Taiwan remains a critical part of the global technology supply chain, especially in semiconductors, which benefit from the AI megatrend. Additionally, Taiwan is among the most attractive dividend-paying markets compared to other developed markets, reflecting its sustainable and stable market structure. The Forward P/E is around 15.9x (+0.8 S.D.), which is not considered overly expensive. Nevertheless, investors should closely monitor the progress of US trade deal, especially around the trade deal deadline on July 9, which could present a key risk to market direction.
Investment Strategy:
