GLOBAL

To Start 2024, Taiwan Is the World’s Hottest Stock Market — Here’s What To Know

The Magnificent 7 holds a significant chunk of the US stock market, making up nearly one-third of the S&P 500. But in Taiwan, it’s just Taiwan Semiconductor ($TSM) that comprises 30% of the country’s stock market. The world’s largest manufacturer, supplying tech giants like Nvidia ($NVDA) and Apple ($AAPL), has rallied over 40% this year and recently reported its fastest monthly revenue growth since 2022. And it’s soon to pocket $6.6B in federal grants to build a third plant in Phoenix.

An AI market: Despite its outsized global impact, Taiwan’s most valuable stock is hardly the only contributor to Asia’s fastest-growing stock market — hosting an estimated 92% of the world’s advanced chip production. Semiconductor giants like TSMC, MediaTek, and ASE Technology, accounting for 65% of Taiwan’s market, have propelled the Taiex index by 16% year-to-date.

• Retail investors own ~80% of assets invested in Taiwan equity funds — and have expanded their ETF holdings by 80% year-over-year to USD$50B.

• While many are chasing the AI boom, the country’s smallest sectors — healthcare, materials, and real estate — have also posted double-digit gains to start 2024 and could continue to grow.

My Arrakis, my Dune

Taiwan’s economy is rising, with GDP expected to clear 3.4% this year. Earnings are forecasted to increase by two digits, and exports are up 19% thanks to AI demand. However, Taiwan stocks are trading at a premium as the country fetches one of the global markets’ higher valuations (20.7x price-to-earnings). But you can’t talk about Taiwan’s boom without addressing the elephant in the room.

• Despite Taiwan’s self-governance, neighboring China considers it to be a territory — threatening to take the island by force as part of the Chinese reunification.

• Given Taiwan’s unprecedented importance to the AI boom, such a move would be detrimental, with analysts at Bloomberg estimating a war over Taiwan could cost $10T.

How can I invest in Taiwan? If the threat of invasion or the high concentration of tech stocks don’t make your pockets nervous, one way to gain exposure to the Taiwan boom is through an ETF. The Franklin FTSE Taiwan ETF ($FLTW), which offers investors 123 Taiwanese stocks at a 0.19% expense ratio, is the cheapest and best-performing fund tracking the market. But keep your eyes peeled — as geopolitical risks go, Taiwan is among the biggest.

PARTNERED WITH RYSE

Smart Home Device Shipments Are Booming and Smart Lighting Is Leading the Charge.

With device shipments expecting to double in the next 3 years, Best Buy has made a huge bet on an innovative startup in this category and stocked their product in over 100 retail stores.

This up-and-comer is RYSE, and their automated window shade tech provides BIG energy savings by controlling the amount of lighting that enters homes and commercial buildings.

• There are A LOT of windows out there, and with only 10% of them being automated, this is a market that’s already worth billions.

• Best Buy made similar bets on smart home titans Ring and Nest, both of which saw billion-dollar exits at the hands of Amazon and Google.

While those opportunities were limited to a select few, you can still invest in RYSE’s vision of owning the Smart Shades industry.

Here’s how you can capitalize on this booming industry.

LARGECAP RECAP

🏆 Costco capitalizes on America’s obsession with gold bullion

While stock markets reach all-time highs, global conflicts and stubborn inflation create uncertainty. Investors have become more defensive on markets, but everyday Americans are buying physical gold — benefiting one unexpected player — Costco ($COST).

• Last August, Costco began selling 1 oz 24-karat gold bullion — with a modest 2% markup, the bars would retail around $2.4K.

• Wells Fargo estimates monthly sales of $100-200M for the retail giant, marking a significant but “very low profit business.”

Golden opportunity: Rising anxiety prompts Americans to invest in physical gold — turning the once-fringe, pessimistic practice of buying and storing gold into a mainstay for long-term investment. However, an exchange-traded fund (ETF) like the iShares Gold Trust ($IAU) could be more suitable for investors looking to capitalize on the gold rush, given the option to sell quickly. Regardless, gold has already surged to all-time highs — with futures up 13% year-to-date to over $2.3K.

Read: The reasons behind gold’s remarkable rise and how geopolitical tensions influence investment strategies.

AI is the next big marketing technology investment play: Join +6.5K investors backing RAD AI, the startup disrupting a $633B industry with clever content creation. RAD AI has already raised $27.9M by helping marketers speed up the delivery of campaign results using AI. Engineers and execs from Google, Meta, and Amazon have already invested — will you get in on the play? Limited space remaining in this round, learn more about investing in RAD AI →*

Markets & Economy

Can the NYSE attract Japanese companies? They’re hoping to, and the exchange’s leadership teased talks with a pipeline of promising Japanese companies across different industries and growth stages — with similar plans for Korean, Singaporean, and Indonesian companies. [Read]

USPS to raise stamp prices to $0.73: Projecting $160B in losses over the next decade, it’s no wonder stamp prices have risen 36% since 2019. The new pricing, coupled with funding from the Biden admin, could help matters at least a little. [Read]

Consumer Price Index (CPI) rises more than expected: The key inflation gauge jumped 0.4%, mostly driven by increasing energy and shelter costs. It’s the third straight month of prices refusing to ease, with many analysts reconsidering June rate cut predictions. [Read]

Business & Wealth

The ten fastest-growing chains in the US: Cava ($CAVA), fresh off last year’s IPO, leads the list thanks to their popular Mediterranean fare, while Scooter’s Coffee and LongHorn Steakhouse rounded out the top three. Meanwhile, old favorite Olive Garden landed at number nine, with 20 new locations opening last year. [Read]

Bytedance posts 60% profit jump in 2023: A potential TikTok ban in its largest market wasn’t a problem for the Beijing-based company, which generated $40B in earnings, up from $25B the year before. [Read]

NYCB ($NYCB) offers country’s highest interest rate: The embattled regional lender raised its annual percentage yield to 5.55% — which some analysts see as a sign that the bank is desperate to attract deposits after losing 7% amid funding woes earlier this year. [Read]

*Thanks to our sponsors for keeping the newsletter free.

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DIGIT OF THE DAY

Investors Injected $126.5B Into ETFs In March, But The Tech Sector Barely Contributed

March Madness wasn't just for basketball — it was for stocks, too. Exchange-traded funds (ETFs) scored big and witnessed an exceptional rise in demand, with over $126.5B in inflows — the third strongest showing since 2021. Despite steep tech sector valuations, investors display an appetite for new trading avenues.

• ETFs tracking the industrials, materials, and energy sectors led the inflows and contributed $1.4B, $1.3B, and $600M, respectively.

• Over the same period, $600M was pulled out of the technology sector — and healthcare ETFs saw outflows of $700M.

Is the ETF (Exceptional Trading Frenzy) going to continue? According to FactSet, the materials, energy, and industrial sectors have seen the largest volume of earnings downgrades. Investors might be hoping that analysts are wrong — or looking for a safer place to put their cash. With tech valuations sitting above historic levels and megacaps representing the majority of index gains so far in 2024, a shift towards more cyclical, value-oriented stocks could be the contrarian trade investors need.

Read: Discover why ETFs are reshaping the investment game and what this means for your financial future.