The numbers are staggering. In Taiwan, a significant portion of the population has embraced a new form of financial speculation, taking on debt not for traditional assets like homes or vehicles, but to purchase shares in a booming stock market. This trend emerged as the island’s stock exchange registered an extraordinary 59% surge in the first half of the year, largely fueled by a global demand for AI hardware, particularly from giants like Taiwan Semiconductor Manufacturing Co (TSMC).
Consider Lucas Chen, a 34-year-old real estate worker whose base salary hovers around NT$50,000, or about €1,360. Chen, who has been trading for a decade, saw what he described as “a good opportunity” at the beginning of the year. He secured three bank loans totaling NT$5 million (€136,000), using his Tesla as collateral for two of them, to invest in tech shares, with nearly half of his holdings in TSMC. Within six months, his tech investments soared by almost 70%, boosting his total holdings by approximately NT$20 million (€544,000). Chen acknowledges the older generation’s skepticism about borrowing for investments but maintains that with careful calculation, the risks are “controllable.” His experience exemplifies the lucrative potential that has drawn many into this high-stakes environment.
Yet, this aggressive pursuit of returns carries a palpable downside. Financial influencer Yeh Yu-shuo, who manages a Facebook group with hundreds of thousands of members exchanging investment advice, has witnessed the darker side of this frenzy. He recounts posts from individuals contemplating extreme measures after incurring substantial losses. One anonymous member, for instance, revealed investing NT$10 million (€272,000) in recent months, including a NT$6 million (€163,000) mortgage, only to lose nearly half of it. This individual described waking up in a panic and seeking psychiatric help, along with spiritual guidance, finding no relief. Such anecdotes underscore the severe emotional and financial toll when these leveraged bets turn sour.
The phenomenon is not isolated to a few individuals. Norman Yin, a professor of money and banking at National Chengchi University, observes that young people are “buying stocks like crazy.” Taiwanese banks, flush with “unprecedented” levels of deposits, partly due to stagnant property prices, are eager lenders. This confluence creates an environment where, as Yin notes, one could potentially earn more in a single day from stock gains than a fresh graduate might make in a month, a sum around NT$40,000 (€1,090). This prospect makes stock market investing appear “faster and easier than sitting in an office and working hard,” shifting perceptions of traditional labor versus speculative wealth generation.
The data reflects this heightened activity. Margin trading, where investors borrow funds from a broker to purchase securities, increased by nearly 20% in the first half of the year compared to the preceding six months, according to Taiwan Stock Exchange figures. While Taiwan’s Financial Supervisory Commission maintains that overall “credit risk remains under control,” the stock exchange has begun publishing social media videos specifically warning young investors about the dangers of defaulting on loans. The allure is amplified by social media platforms, which are rife with stories of individuals making substantial sums and even quitting their jobs to trade full-time. Marketing specialist Jerry Lee, 30, a self-described conservative investor, admits to a pang of envy watching friends post about their rapid gains, noting the “painful” feeling when someone earns two or three months’ salary in just two days.
This market rally, however, is not without its fluctuations. Global stock markets, after surging to record highs driven by AI-related spending, encountered resistance in July. This period saw a hammering of the tech sector amid concerns about the timing of returns and warnings that company valuations had become excessive. The anticipation of a US interest rate hike also dampened sentiment, potentially curbing demand for stocks, especially those in the tech sector, which often rely on borrowing to fuel their investments. Despite a summer sell-off that saw Taiwan’s stock index fall about 16% from its June 22 high to July 30, the Taiex has since recovered almost all those losses. Yeh Yu-shuo expresses confidence in the market’s stability “as long as TSMC remains stable,” while Lucas Chen remains committed, driven by the ongoing opportunity to generate significant returns.
