Taiwan investors borrow to chase AI stock rally

Taiwanese investors are borrowing to buy stocks after an AI-linked rally lifted the island's market, bringing large gains for some traders and warnings from authorities about debt risks.

Taiwan's stock market rose 59 percent in the first half of the year, helped by demand for AI hardware made by TSMC and other companies. Taiwan Stock Exchange data show margin trading, where investors borrow from brokers to buy securities, rose nearly 20 percent in the first half from the previous six months.

Real-estate worker Lucas Chen told AFP he borrowed NT$5 million, using his Tesla as collateral for two of three bank loans, and said his tech holdings rose by about NT$20 million by late June. About half of his tech investments were in TSMC.

Others have reported losses. Financial influencer Yeh Yu-shuo told AFP he had seen posts in his large Facebook investment group from people distressed by trading losses. One anonymous poster said in early August that they had invested NT$10 million, including a NT$6 million mortgage, and had lost nearly half of it.

Taiwan's Financial Supervisory Commission told AFP that overall “credit risk remains under control”. The stock exchange has begun posting social media videos warning young investors about the risk of defaulting on loans.

The Taiex fell about 16 percent from its June 22 record high to July 30, but has recovered almost all of those losses, according to the supplied market figures.