Morgan Stanley Capital International Inc (MSCI) yesterday said it would lower the weighting of Taiwanese shares in two of its equity indices. The announcement sent the TAIEX plunging to 8,884.09 points, a decline of 0.31 percent.
The weighting of Taiwanese shares in the MSCI Asia ex-Japan Index was cut by 0.2 percentage points to 19.7 percent, while that in the MSCI Global Emerging Market Index was lowered by 0.1 percentage point to 11.7 percent.
The weighting adjustments will take effect after the stock market closes on May 31, MSCI said.
“The recent appreciation of the New Taiwan dollar against the US dollar would be the main reason for [the] Taiwan stock market, mostly composed of export-oriented companies, to be downgraded by the MSCI,” Edward Pulling, a fund manager at JPMorgan Asset Management (摩根富林明投信), said in a note yesterday.
Currently, a total of 125 companies listed on the Taiwan Stock Exchange and the over-the-counter market are included in the MSCI Taiwan Index, with Taiwan Semiconductor Manufacturing Co (台積電) topping the list and weighing about 14 percent in the index.
In its semiannual index review, MSCI said it would remove Mitac International Corp (神達電腦) and PixArt Imaging Inc (原相科技) from the MSCI Taiwan Index, but no other stocks would be added to the index.
That sent the share price of Mitac International down 3.96 percent to NT$10.90, its lowest since January 2009, while the price of PixArt Imaging tumbled 5.68 percent to close at NT$108, stock exchange data showed.
However, the two stocks will be added to the MSCI Global Small-Cap Indices with 13 other Taiwanese firms, MSCI said. The index compiler said it would also remove eight others from Global Small-Cap Indices, effective May 31.
“I am not surprised by the removal of PixArt and Mitac from the MSCI Taiwan Index because the two companies are facing falling shipments amid fierce competition,” Grand Cathay Securities (大華證券) analyst Mars Hsu (徐振家) said.
The other 13 new additions are all electronics stocks — Chenming Mold Industrial Corp (晟銘電子), Crystalwise Technology Inc (兆遠電子), Lite-On IT Corp (建興電子), Primax Electronics Ltd (致伸科技), Sercomm Corp (中磊電子), Skymedi Corp (擎泰科技), Viking Tech Corp (光頡科技), Win Semiconductors Corp (穩懋半導體), Chi Mei Materials Technology Corp (奇美材料), Hiroca Holdings Ltd (廣華控股), Actor Inc (聖暉工程), Adimmune Corp (國光生物科技) and Taiwan Navigation Corp (台灣航業).
The eight stocks to be removed from the small-cap indices are C--Media Electronics Corp (驊訊電子), Kai Chieh International Investment Ltd (楷捷國際投資), RDC Semiconductor Co Ltd (金麗科技), Taiwan IC Packaging Corp (台灣典範半導體), Tecom Co Ltd (東訊), Union Insurance Co Ltd (旺旺有聯產物保險), Yufo Electronics Co Ltd (育富電子) and Zentel Electronics Corp (力積電子).