Taiwan’s weightings in the two indices provided by MSCI Inc have been cut after the global index provider’s semi-annual index review, but analysts said the local equity market will continue an uptrend in the mid-term amid ample liquidity.
After the latest index review, Taiwan’s weighting in the MSCI Emerging Markets Index has been lowered from 12.15 percent to 12 percent, while the weighting in the MSCI All-Country Asia ex-Japan Index has been cut from 14.49 percent to 14.27 percent.
It was the seventh consecutive quarter for Taiwan’s weighting to be cut in the MSCI Emerging Markets Index.
However, the MSCI has left Taiwan’s weighting in the MSCI All-Country World Index unchanged at 1.31 percent.
The index provider has also adjusted the weighting of individual Taiwanese stocks.
Hon Hai Precision Industry Co (鴻海精密), the world’s largest electronics maker, is up by 0.4 percent, the largest increase among local stocks in the MSCI indices.
MSCI has also added two stocks — metal casing supplier Casetek Holdings Ltd (鎧勝控股) and shoe maker Feng Tay Enterprises Co (豐泰鞋業) — to the MSCI Global Standard Indices.
MSCI removed from its global indices PC maker Clevo Co (藍天電腦), Far Eastern Department Stores Ltd (遠東百貨), biotech firm ScinoPharm Taiwan Ltd (台灣神隆), printed circuit board supplier Unimicron Technology Corp (欣興電子), power cable manufacture Walsin Lihwa Corp (華新麗華), property developer Farglory Land Development Co (遠雄建設) and Formosa International Hotels Corp (晶華酒店).
All are now part of the MSCI Global Small Cap Indices.
MSCI added 10 local stocks to its small cap indices, including integrated circuit designer Asmeida Technology Inc (祥碩科技), cosmetics brand Chlitina Holding Ltd (麗豐控股), contact lens maker Ginko International Co (金可國際), packaging material supplier Green Seal Holding Ltd (綠悅控股), Kung Long Batteries Industrial Co (廣隆光電), IC packaging and testing services provider Orient Semiconductor Electronics Corp (華泰電子), PCB maker Gold Circuit Electronics Ltd (金像電), TV shopping channel operator Momo.com Inc (富邦媒), electronics component maker Senao Networks Inc (神準科技), and IC packaging and testing firm ShunSin Technology Holdings Ltd (訊芯科技).
The index adjustments are scheduled to take effect after the market closes on May 29, the last trading day of the month.
The TAIEX closed up 0.45 percent at 9,724.11 points yesterday.
The local bourse has posted losses in recent sessions as investors grew weary of listed companies’ disappointing first-quarter results and a cautious second-quarter outlook for the electronics sector.
With the earnings season coming to an end, uncertainty in the local bourse is being removed, and downward pressure is expected to fade, Yuanta Polaris Securities Investment Trust Co (元大寶來投信) fund manager Betty Chen (陳思蓓) said.
Taiwan’s economic fundamentals remain sound, so with global liquidity at a high, it is possible for the local equity market to move higher in the mid-term, Chen said.
Taishin Securities Investment Trust Co (台新投信) fund manager Shen Chien-hung (沈建宏) said that investors should be alert to possible selling just before the index adjustments take effect, since it is likely that foreign investors will adjust their portfolios based on the MSCI’s review.
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