Market views· Sector Analyst
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The Taiwan market continues to exhibit a clear rotation into defensive sectors, with risk-off sentiment dominating overall market conditions. The financial sector (0055) is leading the market with overwhelming relative strength versus the benchmark. Conversely, cyclical sectors such as technology (0052), semiconductors (00891), and 5G/telecommunications (00881) are continuing to underperform. The spread between cyclical and defensive sectors stands at -9.58%, highlighting a distinct preference for defensive assets. While rotation momentum remains stable, the market's fundamental bias is toward risk aversion.
Action: It is crucial to manage risk by allocating assets to defensive sectors in the current market environment. We recommend underweighting cyclical sectors and overweighting defensive sectors.
| # | Type | |||||
|---|---|---|---|---|---|---|
| 1 | Financials 0055 | DEF | +15.14% | +18.82% | +28.04% | +24.39 |
| 2 | Green Energy 00896 | DEF | +0.14% | −4.40% | −9.71% | +5.33 |
| 3 | Technology 0052 | CYC | −0.55% | −0.73% | −0.89% | −1.13 |
| 4 | Semiconductor 00891 | CYC | −1.97% | +0.79% | −5.38% | −4.47 |
| 5 | 5G/Telecom 00881 | CYC | −3.31% | −4.35% | −13.77% | −3.43 |
Stable performance is expected during the market's risk-off phase, supported by strong relative strength and momentum.
Sustained underperformance is anticipated due to a sharp decline in long-term relative strength and negative momentum.
As a cyclical sector, it is vulnerable to market risk-off sentiment, with both short- and long-term relative strength showing weakness.
Demonstrating overwhelming strength relative to the benchmark with relative strength of +15.14%, +18.82%, and +28.04% over 20, 60, and 120 days, respectively. Momentum is also very strong at +24.39, indicating sustained leadership driven by defensive characteristics amid market risk-off sentiment.
20-day relative strength is positive at +0.14%, but performance has been weak over 60 days (-4.4%) and 120 days (-9.71%). Momentum is positive at +5.33, showing the second-best performance among defensive sectors after financials.
20-day relative strength is slightly negative at -0.55%, with weakness persisting over 60 days (-0.73%) and 120 days (-0.89%). Momentum is negative at -1.13, but the sector is showing relatively better performance compared to other cyclical sectors.
20-day relative strength is -1.97%, indicating a correction phase, while 120-day relative strength is also down at -5.38%. Momentum is negative at -4.47, reflecting vulnerability to market risk-off sentiment as a cyclical sector.
20-day relative strength is -3.31%, indicating a correction phase, while 120-day relative strength has plunged to -13.77%. Momentum is negative at -3.43, marking the worst performance among cyclical sectors.
The market is showing a clear rotation into defensive sectors, with risk-off sentiment prevailing.
The average relative strength of defensive sectors is +7.64%, while cyclical sectors record -1.94%, resulting in a spread of -9.58%. This is starkly illustrated by the financial sector (0055) with a 20-day RS of +15.14% and 5G/telecommunications (00881) with a 20-day RS of -3.31%.
Key driver: Concerns over economic slowdown and the widespread spread of risk-off sentiment across the market.
Sector ETF prices relative to 0050 from AlphaLenz's daily price database, 2 Nov 2026.