{"id":9393,"date":"2026-06-27T03:07:11","date_gmt":"2026-06-27T03:07:11","guid":{"rendered":"https:\/\/www.fintechpulse8.com\/?p=9393"},"modified":"2026-06-27T03:07:11","modified_gmt":"2026-06-27T03:07:11","slug":"fomo-really-got-me-taiwanese-go-deep-into-debt-to-amp-100-stock-rally","status":"publish","type":"post","link":"https:\/\/www.fintechpulse8.com\/?p=9393","title":{"rendered":"\u2018FOMO really got me\u2019: Taiwanese go deep into debt to amp 100% stock rally"},"content":{"rendered":"

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Andy Cheng is 26, unemployed and, with the help of a little borrowed money, the proud owner of $60 000 worth of Taiwanese tech stocks. And in many ways, he speaks for the entire island of 23 million people when he doles out the following advice: \u201cBuy any stock and you will make money.\u201d<\/p>\n

AI mania has gripped any number of stock markets across the globe in recent months \u2013 South Korea, China, the US \u2013 but perhaps nowhere is at it as frenzied as here in Taiwan, the No 1 producer of the chips that power the technology.<\/p>\n

Read: Taiwan overtakes India as world\u2019s fifth-largest stock market<\/p>\n

Teenagers are rushing to open brokerage accounts; spikes in trading volumes are crashing firms\u2019 websites; and the Taiwanese market \u2013 up well over 100% in the past year even after a tech selloff spread across Asian markets Tuesday \u2013 is rallying so fast that in a matter of weeks it overtook the UK, Canada and India to become the world\u2019s fifth largest.<\/p>\n

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Much of this boom is, like in Cheng\u2019s case, fueled by heaps of money borrowed at rock-bottom interest rates. So much so that many of the island\u2019s brokerages have hit their internal limits on certain types of loans, forcing them to demand more collateral and bump up their rates, according to people familiar with the matter.<\/p>\n

Those investors who are rebuffed by their brokers often just turn to their banks for leverage instead, taking out new loans or canceling financial products to free up cash.<\/p>\n

The borrowing binge is so intense, and has spread so deeply across the financial system, that it even disrupted a recent central bank debt auction. Not enough buyers showed up to buy all the debt on sale on 3 June, the first time that\u2019s ever happened.<\/p>\n

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This frenzy is what most worries the contrarians who see Taiwan as Exhibit A of the world\u2019s rapidly inflating AI bubble.<\/p>\n<\/blockquote>\n

\u201cTaiwan\u2019s stock market is clearly overheated,\u201d said Dachrahn Wu, professor at the department of economics at the National Central University.<\/p>\n

Read: Taiwan market cap tops $4trn on AI boom, overtaking UK<\/p>\n

He fears that a sudden, deep sell-off would trigger \u201cdevastating losses\u201d for young investors who \u201csee equities as easy money\u201d.<\/p>\n

Cheng scoffs at such talk. \u201cIt\u2019s not a bubble,\u201d he says, leaning forward to be heard over the din.<\/p>\n

It was a weekday evening, and Cheng was hanging out with a few friends at Pin Xian Rechao, a little stir-fry joint on the south side of Taipei that\u2019s become a sensation ever since Nvidia Corp\u2019s CEO, Jensen Huang, was recently spotted grabbing dinner there.<\/p>\n

The stock market had sunk earlier that day, pushing the benchmark index down 3.5%, but the mood at Pin Xian was upbeat, almost raucous, as diners munched on deep-fried pork liver and pineapple shrimp balls.<\/p>\n

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Jensen Huang hands out food to the crowd outside Pin Xian Rechao restaurant in Taipei. Image: Lam Yik Fei\/Bloomberg<\/p>\n<\/div>\n

All across the restaurant, there was excited chatter about AI and the market and whether to take advantage of the day\u2019s declines and buy more stocks on the cheap. In one corner, a middle-aged man could be heard lecturing his friends on the ins and outs of PE ratios and how to use them to pick winners.<\/p>\n

At Cheng\u2019s table, all deferred to him, an accountant by trade, when the conversation turned to stocks. He\u2019s read up on how the dotcom boom of the 1990s ended in bust, he says, and is confident that this rally is very different. \u201cThis time it has substance.\u201d<\/p>\n

Read: Bank of England warns debt-fuelled AI boom could unravel<\/p>\n

This is a refrain often heard from bulls in Taipei.<\/p>\n

They point to the global dominance of Taiwan Semiconductor Manufacturing Co and the large pack of companies behind it. Together, they produce 90% of the world\u2019s most advanced chips \u2013 crucial cogs in the cutting-edge technology that goes into smartphones, laptops, robotics and, most importantly, the massive AI data centers that are popping up across the globe.<\/p>\n

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Taiwan Semiconductor Manufacturing\u2019s plant in Hsinchu, Taiwan. Image: An Rong Xu\/Bloomberg<\/p>\n<\/div>\n

Of course, should that frenetic AI buildout suddenly slow at some point, as some on\u00a0Wall Street suspect, then the demand for those chips will cool, too.<\/p>\n

Moreover, the speculative mania sweeping Taiwan today is\u00a0rapidly approaching the fevered pitch\u00a0it reached during the dotcom days.\u00a0Over the past 12 months,\u00a0the amount of money investors borrowed from brokerages\u00a0to finance stock purchases\u00a0swelled 160%, leaving it near\u00a0an all-time high set just\u00a0before the 2000 crash.<\/p>\n

Read: AI\u2019s $1.3trn future increasingly hinges on Taiwan<\/p>\n

That surge in margin debt, as it is called, dwarfs the 50%\u00a0increase recorded in the final 12 months of the bubble back then.\u00a0 It\u00a0even tops the 94% rise\u00a0posted recently in Asia\u2019s other AI powerhouse, South Korea, where the government has fanned the\u00a0stock-investing fever and helped push\u00a0the market higher.<\/p>\n

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For many Taiwanese, it\u2019s their first time borrowing money to amp their bets.<\/p>\n

\u201cFOMO really got me,\u201d Ada Hung said.<\/p>\n

Hung, 39, is part of the rapidly expanding community of social-media influencers who dole out stock tips in Taipei. Posting under the handle Banini, she\u2019s up to nearly half a million followers.<\/p>\n

For years, she had refused to go into debt to goose returns but as she watched the market spike higher, day after day, and saw friends raking in far more than she was, she gave in to temptation and took out a NT$5 million ($158 302) loan in May. Better \u201cto chase the opportunity\u201d, she figured, \u201cthan let it slip away\u201d.<\/p>\n

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Ada Hung. Image: Lam Yik Fei\/Bloomberg<\/p>\n<\/div>\n

Sevenfold surge<\/span><\/strong><\/p>\n

Investor demand for loans has been so torrid that Taiwanese brokers have themselves embarked on a borrowing spree to shore up working capital. They\u2019ve issued nearly $1.2\u00a0billion of bonds this year, more than seven times the amount raised in all of 2025, data compiled by Bloomberg show.<\/p>\n

Some of them are also turning to unconventional fundraising sources, like the syndicated loan market, where\u00a0the pace of deals has been\u00a0unprecedented this year, according to data compiled by Bloomberg.<\/p>\n

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Nascent signs of trouble are emerging, even as the stock market continues to push higher.\u00a0Investor defaults stemming from stock trades, for instance, have\u00a0more than doubled in June to over NT$2 billion, the highest monthly total recorded since data were first released in 2019.<\/p>\n

To Wu, the economics professor, it\u2019s clear that authorities need to take concrete steps to rein in the frenzy and avoid a crash later on. \u201cTaiwan\u2019s government should step in to cool the market,\u201d he says.<\/p>\n

Stress tests<\/span><\/strong><\/p>\n

Contacted by Bloomberg News for comment, a unit of the\u00a0Financial Supervisory Commission that\u00a0oversees\u00a0brokerages said it was closely monitoring the market\u00a0for risks but that\u00a0leverage in the industry\u00a0remains\u00a0in check so far.<\/p>\n

The unit, the Securities and Futures Bureau, said in a statement that\u00a0none of the 34 brokerages that are\u00a0active in various forms of leverage financing had breached regulatory limits as of May.<\/p>\n

Moreover, the bureau said\u00a0those defaults in the\u00a0stock market remain less than\u00a00.002% of all\u00a0transactions.<\/p>\n

\u201cWe will continue to monitor securities firms\u2019 business conditions and risk-control measures,\u201d the regulator said, noting that some have already started taking action by cutting leverage ratios, suspending online loan applications and adjusting interest rates.<\/p>\n

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A bookstore with finance books on display in Taipei. Image: Lam Yik Fei\/Bloomberg<\/p>\n<\/div>\n

Industry insiders say they\u2019ve seen margin-loan rates get bumped up by 0.2 percentage point or more \u2013 a meaningful increase on that kind of leverage at a time when the central bank\u2019s benchmark rate is just 2%.<\/p>\n

And on unrestricted loans, which allow investors to borrow cash by pledging their shares and exchange-traded fund holdings, the increases have been as big as one percentage point, they say.<\/p>\n

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Some firms have instructed sales staff to push their most aggressive clients to rein in risk. Others have started stress-testing their loan portfolios against a sudden plunge in the market of, say, 20% or 30%.<\/p>\n

Reached for comment, some firms acknowledged taking concrete measures to safeguard their finances. KGI Securities, the island\u2019s second-largest local brokerage, said it constantly monitors its leverage financing business and had lowered leverage ratios on some stocks before bumping them back up this month.<\/p>\n

Read: Big tech\u2019s costly AI race is fuelling hundreds of billions of dollars in debt deals<\/p>\n

Fubon Securities,\u00a0 Taiwan\u2019s third-largest local brokerage, said it has recently adjusted certain lending rates and altered margin requirements for lower-rated, less liquid and more volatile securities, while financing terms for other securities remain steady.<\/p>\n

SinoPac Securities, the fourth biggest, said it reviews its overall funding position daily to manage lending quotas and make the necessary adjustments. Cathay Securities, the fifth largest, said it\u2019s imposed limits on unrestricted loans tied to certain high-risk stocks.<\/p>\n

Yuanta Securities, Taiwan\u2019s biggest brokerage, declined to comment on the matter.<\/p>\n

\u201cIf AI momentum fades, the spillovers wouldn\u2019t just stay in the stock market,\u201d said Alicia Garcia Herrero, chief economist for Asia Pacific at French bank Natixis SA. \u201cYou\u2019d likely see pressure on brokerages, reduced household consumption and a hit to growth via exports.\u201d<\/p>\n

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The vast majority of analysts at banks and brokerages predict more stock gains in Taiwan in the coming months. Image: Lam Yik Fei\/Bloomberg<\/p>\n<\/div>\n

Goldman\u2019s buy rating<\/span><\/strong><\/p>\n

For now, though, this remains a remote concern for most here. The vast majority of analysts at banks and brokerages predict more stock gains in the coming months, including Goldman Sachs, which recently slapped a buy recommendation on the market.<\/p>\n

At Pin Xian that night, all giddily agreed with this sentiment.<\/p>\n

After Cheng, the unemployed accountant, finished laying out his bold prediction for an across-the-board rally, his friend Albert Chen, a 25-year-old law student, piped up to extoll the virtues of a market so heavily dominated by tech companies.<\/p>\n

They account for around 20% of the island\u2019s economic output and have an 80% weighting in the benchmark stock index.<\/p>\n

Not even a month-long rout could dent his confidence in the market, Chen said. The fundamentals are just too strong to worry. \u201cTaiwan\u201d, he said, \u201cis terrific\u201d.<\/p>\n

\u00a9 2026 Bloomberg<\/p>\n<\/p><\/div>\n

#FOMO #Taiwanese #deep #debt #amp #stock #rally<\/p>\n","protected":false},"excerpt":{"rendered":"

Andy Cheng is 26, unemployed and, with the help of a little borrowed money, the proud owner of $60 000 worth of Taiwanese tech stocks. And in many ways, he… <\/p>\n","protected":false},"author":1,"featured_media":9394,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[4111,772,2219,3524,64,91,11420],"class_list":["post-9393","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing","tag-amp","tag-debt","tag-deep","tag-fomo","tag-rally","tag-stock","tag-taiwanese"],"_links":{"self":[{"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/posts\/9393","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=9393"}],"version-history":[{"count":0,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/posts\/9393\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/media\/9394"}],"wp:attachment":[{"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=9393"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=9393"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=9393"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}