Next weekend, without a single share being bought or sold, the value of many stock markets around the world will rise or fall in relation to one another. \nMorgan Stanley Capital International is recalibrating the many stock indexes it compiles to reflect the so-called free float: the amount of the component companies' shares that are freely available for trading. It is excluding shares held by government bodies, foundations or others that are not expected to put up their stock for sale. \n"What free float does is exclude from market capitalization holdings that are not available to purchase, such as strategic or family holdings," said Baer Pettit, the executive director of MSCI. "Free float represents the real opportunity set -- what is actually available for investors to purchase." \nThe plan to switch to a free-float system was announced last May and some changes were made in November. The shift will be completed after the markets close on Friday. \nThe rebalancing will leave the most open markets, including those of the US, Britain, Australia and Ireland, with larger portions of global indexes. Markets with traditions of state control of large enterprises, including Japan, Germany, France and other European countries, will end up with smaller weightings. So will many emerging-market nations. \nThe composition of stock indexes is important to many investors because fund managers use the indexes to guide them in building their portfolios. Hundreds of billions of dollars are held in funds that track indexes, and many other funds use indexes as benchmarks for judging returns. \nWhen indexes are rebalanced, managers of index funds must adjust their portfolios accordingly. Managers of funds that use the indexes only as benchmarks do not have to make adjustments, but by maintaining a holding when its index weighting has changed, a manager is making an implicit judgment on the value of that company. \n"If there's a stock that's 0.8 percent of an index and you have 1.1 percent, then if the index weight goes down to 0.6 percent, your bet's going to increase without you doing anything," said Brian O'Neill, a manager of global growth funds at Gartmore Investment Management, a British subsidiary of Nationwide Mutual Insurance, based in suburban Philadelphia. \n"The really important thing about these index changes is they put fund managers on alert that something is happening," he said. "It's a good excuse for them to consider their positions in these stocks." \nIn certain cases, he said, the rebalancings give investors an excuse to dump stocks that they have held only because of their large index weightings. Conspicuous examples are partially privatized European corporate giants like France Telecom and Deutsche Telekom, which are still largely in state hands. \n"Their weightings are going to fall, but they're dud stocks anyway," O'Neill said. "If you don't like a stock in your portfolio, it provides another reason to do something about it." \nFTSE International, did its rebalancing in a single move last June. Peter Wall, FTSE's senior vice president for business development, said the changes had produced no significant moves in prices because its indexes were originally designed to include companies with the most freely traded stocks. \n"It's a misconception that rebalancings move share prices," he said, "but they can impact marketplaces and long-term demand."
NOTABLE SHIFT: By 2030, 50% of all laptops would be assembled in Southeast Asia, while Taiwan would still mostly focus on research and development, a report said Global laptop and desktop computer supply chains are expected to shift significantly away from China in the next 10 years, a Market Intelligence & Consulting Institute (MIC, 產業情報研究所) report said. By 2030, only 40 percent of global laptop production would remain in China, said the report, which was released on Thursday. “The reshuffling of the global supply chain will be one of the most important trends in the next 10 years,” the institute said in the report. “In the long run, key component makers will follow laptop assemblers in moving out of China.” The Taipei-based institute predicted most key component makers
Yageo Corp (國巨), the world’s third-largest supplier of multilayer ceramic capacitors, has formed a strategic alliance with Hon Hai Precision Industry Co (鴻海精密) to develop key electronic components for electric vehicles and digital healthcare, it said yesterday. The alliance is to help Yageo boost its revenue from high-end components for vehicles and industrial, medical and aerospace devices, as well as those used in 5G and Internet-of-Things devices, the company said. The companies signed the strategic alliance agreement at Yageo’s headquarters in New Taipei City’s Sindian District (新店). Their cooperation is to start this quarter, the companies said in a joint statement. “Through the cooperation
SUPPLY CONSTRAINTS: The transferred orders might not provide an immediate revenue boost given local chipmakers’ high utilization rates, a senior analyst said Shares of local contract chipmakers yesterday rose as much as the 10 percent daily limit, as investors bet on orders being transferred from Semiconductor Manufacturing International Corp (SMIC, 中芯國際) after the US imposed export restrictions on the Chinese chipmaker. United Microelectronics Corp (UMC, 聯電) shares soared 10 percent to close at NT$27.5 as 380 million shares changed hands on the Taiwan Stock Exchange. UMC is the world’s No. 3 foundry by revenue, followed by SMIC, according to data from market researcher TrendForce Corp (集邦科技). UMC has product and customer portfolios similar to those of SMIC, TrendForce said, adding that UMC offers 14-nanometer and
‘IMPORTANT MILESTONE’: The firm expects to launch the generic of Revlimid in the US after March 2022. It has already launched the product in some European countries Lotus Pharmaceutical Co Ltd (美時化學製藥) has received tentative approval from the US Food and Drug Administration (FDA) for its abbreviated new drug application (ANDA) for lenalidomide, the company said in a statement on Friday. The ANDA approval is for 2.5mg, 5mg, 10mg, 20mg and 25mg capsules of lenalidomide, which is a generic version of blood cancer drug Revlimid developed by Celgene Corp. It is the first product fully developed and manufactured in Lotus’ facilities in Taiwan. Lotus expects to launch the product in the US — based on its patent litigation settlement with Celgene last year — some time after March