The New Taiwan dollar has broken through the 29.2 mark against the US dollar, reaching its highest level in three years. This sharp appreciation has raised concerns about foreign exchange losses, prompting capital markets to shift focus toward less sensitive sectors like energy and heavy electrical equipment as investors seek opportunities for third-quarter positioning.

Taiwan's stock market initially rallied today, briefly surpassing the upper limit of its 22,500-point trading range. However, under pressure from quarter-end portfolio adjustments and resistance at higher levels, the benchmark index ultimately closed at 22,492 points with trading volume reaching NT$388.1 billion. While the index performance appears strong on the surface, a closer examination reveals significant capital rotation underway.

Market analysts had anticipated this quarter-end adjustment, warning that high-priced AI stocks had become overvalued in the short term and cautioned against chasing prices. This prediction proved accurate as leading AI stocks including Chuan Hu Technology (2059-TW) and Hong Su Technology (3131-TW) saw intraday declines exceeding 6%, while Wiwynn (6669-TW) and Quanta Computer (2382-TW) also experienced simultaneous drops, reflecting institutional investors' substantial quarter-end repositioning.

Concurrently, market data shows institutional capital flowing into robotics, BBU power modules, and energy/heavy electrical equipment stocks. This capital rotation is gaining momentum, with strategic investments in TSMC , Chung Hsin Electric , Hondetec Energy , Hong Su Technology , and Alchip Technologies emerging as key positions to capture resource advantages and market opportunities.

In this environment of currency appreciation, investors face the dual challenge of hedging against potential foreign exchange losses while identifying opportunities created by exchange rate fluctuations - a critical focus for market participants in the coming weeks.