Taiwan Stocks Post World’s Best Q4 Track Record, Averaging 7.67% Gains Over Past 5 Years; Active Market-Cap ETFs Position for Peak-Season Rally

After the Mid-Autumn Festival holiday, global capital markets officially enter the fourth quarter—traditionally a peak season for consumption and investment. Looking at the average fourth-quarter performance of major global equity markets over the past five years, the Taiwan Weighted Index tops the world with an average gain of 7.67%, surpassing the U.S. market’s 6.68% and upending the entrenched belief among most investors that “U.S. stocks are the strongest.” Fund managers note that with the Federal Reserve ending its easing cycle and markets returning to fundamentals, the AI supply chain and corporate earnings in the U.S. and Japan serve as twin engines supporting the market. Investors can position precisely for the peak-season rally amid rapid sector rotation through active Taiwan market-cap ETFs and broad-based U.S. equity ETFs.

According to the data, the average fourth-quarter performance of major global markets over the past five years shows a “more gains than losses” pattern, with the top ten markets all averaging gains above 3%. The Taiwan Weighted Index leads the pack with an average rise of 7.67%, followed closely by the U.S. S&P 500 Index at 6.68%. Markets in Japan, France, and South Korea also posted solid performances exceeding 4%.

After the Rate-Hike Reversal, Fundamentals Take the Lead

This year’s fourth-quarter script carries an added variable. The Federal Reserve decided at its latest FOMC meeting to raise rates by 25 basis points, officially ending the easing cycle that began in September 2024. Facing this monetary policy pivot, market capital is rapidly reshuffling, with focus shifting from “liquidity” back to “fundamentals.”

Hsu Yu-Chih, manager of the Capital Core 50 ETF, said the Fed’s rate-hike decision was in line with market expectations, and attention is expected to return to fundamental assessment. Regions and sectors with solid fundamentals remain capable of withstanding upward rate pressure. He noted that Taiwan’s economy remains stable, and with robust AI demand—particularly amid sustained corporate capital expenditure and continued real-world AI applications—the long-term trajectory is clear. Taiwanese supply chain companies, playing critical roles in key technology and component production, are expected to continue benefiting.

He further analyzed that in an environment of extremely rapid sector rotation, rather than concentrating on individual stocks, investors should utilize active market-cap Taiwan equity ETFs that can flexibly adjust holdings to capture the rally.

U.S. and Japan Equities: Dual Engines Driven by Earnings Momentum

Turning overseas, U.S. and Japanese equity markets also demonstrate resilience. Hsieh Ming-Chih, manager of the Capital S&P 500 ETF, observed that U.S. economic activity continues to expand at a steady pace. Although geopolitical conditions keep the economic outlook shrouded in high uncertainty, domestic spending remains resilient, productivity growth is strong, and corporate earnings prospects remain favorable. The breadth of companies receiving upward earnings estimate revisions continues to widen, indicating that fundamentals and earnings still support U.S. equity performance.

He recommends that, given the diverse themes in U.S. equities and healthy rotation of capital across sectors, investors should utilize broad market-cap U.S. equity ETFs spanning all industries to participate in the rally. The S&P 500 Index’s constituent composition is broad, covering nearly 90% of total U.S. market capitalization. Investing in ETFs tracking this index is effectively investing across all U.S. industries, capturing the full spectrum of U.S. equity performance.

On the Japanese equity front, Hung Yu-Ting, manager of the Capital East Prosperity Fund, analyzed that Japanese corporate earnings have shown resilience. Excluding one-time factors such as tariff rebates and currency effects, corporate profits for April through June grew approximately 9.3% year-over-year. Banks benefit from rate hikes, non-ferrous metals benefit from rising commodity prices, and AI-related stocks benefit from strong AI demand. The market is even more optimistic, expecting Japanese corporate earnings to grow nearly 19% in FY26.

She added that Japanese corporate share buybacks have already reached the full-year 2025 level. Companies continue to strengthen shareholder returns through selling cross-shareholdings, raising dividends, and buybacks. Foreign investors have room to rebuild positions. Both the earnings and capital flow pictures are positive, and with a stable economy, all factors support Japanese equity performance in the fourth quarter.

Asian Markets Strengthen in Tandem; Indian Equities Benefit from Cooling Oil Prices

Other Asian markets are also displaying pre-peak-season optimism. Indian equities closed higher on Monday, with the Sensex surging 564 points to around 74,859, while the Nifty 50 rose approximately 68 points to close above 23,414. Key drivers of the rally included oil prices falling for a fourth consecutive trading day, U.S. Treasury yields retreating from the 5% threshold, and foreign investors turning net buyers of Indian stocks to the tune of roughly 60 billion rupees (approximately $720 million).

Brent crude futures fell below $102 per barrel on Monday, primarily on market expectations that Saudi Arabia’s crude exports through the Strait of Hormuz would increase, offsetting supply concerns triggered by Houthi attacks on Saudi oil pipelines. JPMorgan analysts noted that Middle East oil flows remain surprisingly robust, with total petroleum flows averaging 17.1 million barrels per day over the past ten days.

The U.S. 10-year Treasury yield retreated from the psychological 5% level to 4.959%, while the 30-year yield declined to 5.296%. Cooling yields reduce the relative attractiveness of the bond market, providing support for equities.

On the foreign capital front, foreign investors were net buyers of approximately 60 billion rupees (approximately $720 million) in Indian equities on Monday, ending a streak of six consecutive trading days of cumulative net selling exceeding 1 trillion rupees (approximately $12 billion). However, fund managers caution that a single day of net buying remains limited relative to the prior heavy selling pressure. Going forward, investors should monitor developments in the U.S.-Iran situation as well as oil price and yield trends.

Peak-Season Positioning Strategy

In summary, while the rate-hike shock has intensified short-term market volatility, there are no signs of economic recession. Fund managers believe that rather than over-worrying amid the rate-hike cloud, investors should follow the statistical odds and position through a combination of active Taiwan equity ETFs and broad U.S. equity ETFs to navigate the peak-season sector rotation effectively.

Top 10 global equity markets by average fourth-quarter performance over the past five years:

Note: The remaining markets in the top ten all posted average gains exceeding 3%. Source: Cmoney, September 22, 2026.

Fund managers caution that while historical data supports the fourth quarter, this year’s U.S.-Iran geopolitical risks, oil price trends, and the Federal Reserve’s policy path may still create market disruptions. Investors should comprehensively assess their own risk tolerance and strike a balance between peak-season opportunities and potential volatility.