TAIPEI -- Ever since scoring a 200% return on investment last year, Robert Hou has been looking for the right time to pick up more shares on the Taiwanese stock market.
In March 2020, the 65-year-old retired trading company manager bought stock in Wan Hai Lines, a leading Taiwanese container shipping company, when it dropped to a six-year-low of 13 New Taiwan dollars. Months later, he sold them for NT$39 each.
"I remember there were lockdowns in many places in the world, and shipping stocks were performing terribly because of that. But then I thought, at some point you have to ship products, which means you will need these shipping companies," he told Nikkei Asia.
Hou said he is also holding onto some 4,000 shares of chipmaking giant Taiwan Semiconductor Manufacturing Co. that he bought for NT$400 each. On May 7, TSMC closed at NT$599.
"I think when all the economic indicators of Taiwan are suggesting an uptick trend, it is not hard for people like me, who don't know much about investing, to make some money on the stock market," Hou said.
It seems he is not the only one who feels that way.
A record 670,000 people opened share-trading accounts last year, according to the Taiwan Stock Exchange. That put the total number of accounts at 11.24 million, meaning almost half of Taiwan's population is now investing in stocks. More than 42% of those who opened an account last year are under the age of 30, the data showed.
In restaurants, cafes and even elevators, stock prices are often the topic of conversation. "Every morning when I am in the elevator going up to my office, I see almost everyone's smartphone screen showing trading systems and stock prices," Perry Chien, a tech industry manager, told Nikkei Asia. "Grandmas and grandpas sitting in the next table in restaurants are also talking about semiconductor stocks."
This influx helped push trading volume on the Taiwan Stock Exchange to a record of more than NT$600 billion on April 22. Its weighted index, which had plunged to below 10,000 points in March 2020, hit a historic high of 17,572 on April 26.
Taiwan's stock prices have progressed in line with an improved earnings outlook. The 12-month forward price/earnings ratio for the Taiwan exchange was 16.43 as of Friday, according to Capital IQ -- slightly lower than the 16.69 12 months ago.
Over the same period the market's price to book value -- comparing the market values of the companies listed on the exchange with the net value of their assets -- rose from 1.64 times to 2.4 times, according to Capital IQ.
Semiconductor stocks have been the major driver of the Taiwanese stock market amid a global surge in demand for chips.
Shares in TSMC -- which accounts for more than 30% of the total market capitalization of the Taiwan Stock Exchange -- have more than doubled over the past year, while smaller rival United Microelectronics has seen its shares quadruple over the same period. Memory chipmaker Nanya Technology's shares had risen 40% as of April 29 from a year earlier. MediaTek, the world's second-largest mobile chip designer, after Qualcomm, jumped more than 185% in the same period.
While chip demand is pushing up tech shares, Taiwan's success in containing the spread of COVID-19 and its strong economic growth -- 2.98% in 2020, outpacing China for the first time in 30 years -- have given "safe" shares a jolt, too.
"China Steel's shares very seldom move a lot," said Jane Wu, a housewife and longtime investor on the Taiwan Stock Exchange. "I bought them because they are very stable. It's just like saving money in the bank, but with dividends that are a bit better than the bank interest rates."
But the stock price of Taiwan's biggest steelmaker suddenly doubled from a year ago, and now Wu says she is looking to sell some of her shares.
The surge in share prices has spread across industries, from basic materials like copper and steel to the shipping companies that Hou bet on. Shares of Taiwan’s two biggest marine shipping companies -- Evergreen Marine and Yang Ming Marine Transport -- have skyrocketed by more than seven and 11.5 times, respectively, from a year ago.
"We can see that money across the globe is flowing into the stock markets, supported by the quantitative easing measures by countries around the world, and we have not seen signs of tightening such measures by central banks," Darson Chiu, research fellow at the Department of International Affairs and Macroeconomic Forecasting Center of the Taiwan Institute of Economic Research, told Nikkei Asia. "Although the Taiwan stock market is very brisk at the moment, I would caution the investors to invest carefully, as there are always corrections from time to time."
Another potential risk for the island's stock market comes from the tech industry, which is currently driving its economic growth.
The chip shortage squeezing automakers and electronics manufacturers has shined a light on the global importance of Taiwan's semiconductor industry, with the governments of the U.S., Germany and Japan all pressing Taipei to help resolve the issue.
"It is good that Taiwan's importance is being highlighted, but it is also a double-sided blade that many countries realized their reliance on Taiwan," Roy Chun Lee, deputy executive director of the Taiwan WTO & RTA Center at the Chung Hua Institution for Economic Research, told Nikkei Asia. "We now see the U.S., Europe and also Japan are pushing to bring back chip manufacturing on shore, which could be a hidden concern for Taiwan in the longer run."
Intel's $20 billion plan to expand its capacity in the U.S. is particularly noteworthy, he said. "We should monitor and be cautious whether the U.S., Europe and Japan will favor their local suppliers over foreign suppliers within their borders. ... Taiwan needs to reinforce the other countries' confidence and trust on the island, to accept that products made in Taiwan or by Taiwanese companies are the best balance of research and development, production and supply chain security."
U.S.-China tensions add another layer of uncertainty to the island's chip industry, as do severe water shortages -- chipmaking is a water-guzzling business, and Taiwan is in the midst of its worst drought in more than 50 years.
Still, tech companies are feeling optimistic -- for now.
"The stock market is really good. Look at the Taiwan Stock Exchange index -- it's from less than 10,000 points last March to around 17,000 points now. Almost all major industries are on the rise," said Lai Ming-kuen, general manager at Acter, a builder of high-tech facilities for Google, TSMC and many others.
"Our business is booming too. What we don't know, however, is whether there are any major 'black swan' events coming up, even though we don't foresee any major disruptions on the horizon. ... After all, there has never been a cycle that only has surges but no corrections."