Taiwan's stock market surged last week and held firmly above the 45,000 mark. Institutional investors expect another strong rally before the end of the year — good news for those holding shares.

• Last week the Taiwan market rose more than 1,500 points; although it briefly climbed to 46,000 before pulling back, it held above 45,000.
• Norway's sovereign wealth fund, the world's largest, entered the market in June, and Taiwan's weighting in the MSCI index has risen for three consecutive periods, taking formal effect in September — both seen as underpinning buying support going forward.
• If foreign investors keep buying and futures short positions are covered, the index has a chance to build volume and mount a strong advance; if it pulls back first, it would likely find a base around 42,000 to 43,000 before pushing higher again.
• Statistics over the past decade show Taiwan's market has roughly a 70% chance of rising in August. With July already seeing shrinking volume and margin financing being worked off, the room for a sharp near-term drop is limited, and high-level consolidation is more likely.
• AI-related leading stocks remain the core. Copper clad laminate, IC substrate and ABF groups have rebounded more strongly, while small- and mid-cap stocks and the OTC market have been weaker.

Outlook: In the near term there may be volatility at high levels, but with buying support from foreign investors and sovereign wealth funds, Taiwan's market still has room for another strong rally before the end of the year.