The nation’s stock market is booming this year, and the TAIEX continues to hit fresh highs driven by artificial intelligence (AI) and semiconductor stocks. Not only has the benchmark index moved above 40,000 points and briefly surpassed 42,000 points, but the daily trading volume on the main board has also repeatedly exceeded NT$1 trillion (US$31.65 billion), with a record high of NT$1.4 trillion. As of Friday last week, the TAIEX had risen by 42.15 percent since the beginning of this year, the fourth-largest increase globally and the second-highest in Asia after South Korea’s 77.81 percent.
Amid widespread market optimism, stock investing has become a national pastime, with retail investors driving market rallies. Moreover, the surge has drawn millions of new participants, many of them young people. Taiwan Stock Exchange data showed that about 98,558 new trading accounts were opened last month, following a record 162,000 accounts opened in the previous month. Of those new accounts, 54,506 — or 55.33 percent — were opened by people younger 30 last month, compared with 96,571, or 59.52 percent, the previous month.
The exchange’s data confirm that the local investing population is increasingly younger, with investors relying on odd-lot trading, regular fixed-amount investment plans, exchange-traded funds and margin financing to enter the market, along with the convenience of brokerage apps.
Another driving force for new account openings has been the rise in investors buying stocks for their children to accumulate assets earlier. Last month, 25,217 new accounts were opened for those younger than 19, representing 25.58 percent of new accounts and pushing this cohort to account for 5.1 percent of the nation’s total accounts of 14.2 million, a record high, the exchange data showed.
The developments have raised optimism about broader market participation alongside concerns about the risks that come with it.
On the one hand, the sustainable development of capital markets relies on the participation of young people.
The Taiwan stock exchange is encouraging young people with sufficient financial knowledge, risk awareness, self-discipline to ability to allocate capital effectively to gain investment experience and participate in the growth of the capital markets.
On the other hand, young people are warned not to jump into the market recklessly and use excessive leverage driven by the fear of missing out (FOMO) when they see others make big profits, because no one knows when the bull run will end.
Recently, a young user on the social media platform Dcard wrote that, following the market frenzy driven by news channels, social media and influencers, everyone was talking about buying stocks, adding that he was worried that the market might be nearing its peak and that a reversal might be imminent.
Meanwhile, another user posted that he did not possess any advanced skills or use excessive leverage; his assets simply skyrocketed beyond expectations due to the recent stock rally.
Seeing this significant wealth increase, that user began to question the meaning of his daily work and worried that his job might be replaced by AI someday. Therefore, he went online to ask for opinions on early retirement. Their posts have sparked heated discussions.
The conditions driving a surge in retail investors, especially young people, in Taiwan mirror broader trends in South Korea, Japan and the US, where the continued rises in stocks have given many investors a false sense of security and the impression that stocks could climb forever and they should divert the money they once set aside for other purposes into the stock market for the time being, convinced that potentially fast gains could let them acquire something even bigger.
Such feelings are understandable, as narratives about AI and semiconductors provide young investors with a good opportunity to invest. Zero-commission brokerage apps facilitate their market entry, and stock investments pose an option for wealth accumulation amid stagnant wages, rising living costs and dimming hopes for home ownership.
Potential dangers in investment stem from negligence of other factors that also impact the market and emotionally driven investment fueled by FOMO. The rally might be real, but so are the risks. As for policymakers, the rising number underscores wealth distribution and other issues behind it. The ability to identify those socioeconomic issues and assign appropriate policies in response impacts not only the investment landscape, but also people’s livelihoods and the economy as a whole.
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