Fri, May 12, 2006 - Page 12 News List

MSCI announces index changes

NEW ADDITIONS Shares of Novatek, Cheng Uei Precision, Compal Communications and Phoenix Precision rose on the news of their inclusion in the MSCI index on May 31


Morgan Stanley Capital Interna-tional Inc (MSCI) announced yesterday that it would add Novatek Microelectronics Corp (聯詠), Cheng Uei Precision Industry Co (正崴) and four other local technology stocks to its global indexes at the end of the month.

At the same time, MSCI said it would drop five domestic stocks, including Elitegroup Computer Systems Co (精英) and Synnex Technology International Corp (聯強), from its equity benchmark, the index provider said in a statement released yesterday following an annual review.

The changes to the MSCI global indexes will take effect as of the close of trading on May 31. A total of 227 securities will be added to the MSCI Standard Index Series, while 64 securities will be dropped.

Boosted by the announcement of its inclusion in the MSCI Taiwan Index, shares of Novatek, the nation's biggest maker of drivers for liquid-crystal-display (LCD) panels, jumped 5.5 percent to NT$194.5 on the Taiwan Stock Exchange yesterday. Shares of electronics component maker Cheng Uei Precision also rose 4.9 percent to NT$129.

"As foreign investors usually buy stocks listed on the MSCI indexes, the newly added stocks will likely draw investors' eyes," said Henry Miao (苗台生), an analyst at Hua Nan Securities Investment Management Co (華南永昌投顧).

The new additions to the MSCI Taiwan Index also include: Phoenix Precision Technology Corp (全懋精 密), a semiconductor testing and packaging provider; Compal Communications Inc (華寶通訊), the nation's biggest contract handset maker; Inventec Appliance Corp (英華達), a supplier of digital music players for Apple Computer Inc; and Catcher Technology Co (可成科技), an electronics component maker.

Shares of Phoenix Precision rose 3.9 percent to NT$70 and Compal Communications' climbed 3.4 percent to NT$229. Shares of Inventec Appliances and Catcher Technology, however, slid 0.4 percent and 0.63 percent to NT$158 and NT$371.5, respectively, on profit-taking.

As foreign investors currently account for less than 10 percent of Compal's shareholding -- the lowest among the six new MSCI stocks -- there's a good chance the mobile phone maker's stock could trend up in the future, Miao said.

Foxconn International Holdings Ltd (富士康控股), a handset making arm of Hon Hai Precision Industry Co (鴻海精密), was also picked to join the MSCI Pacific excluding Japan Index.

The stock price of Foxconn climbed 4.6 percent to HK$19.55 yesterday on the Hong Kong Stock Exchange.

MSCI makes changes to the constituents on membership and weightings based on a company's market value, the average number of shares traded and the free float, or the percentage of shares available to investors. The representation of a company's industry group and country indexes is also taken into account by MSCI.

MSCI is majority-owned by Morgan Stanley, the world's third-largest securities firm.

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