The latest adjustments in the nation’s weighting in MSCI indices are expected to have little impact on the future movement of the local bourse, as the changes have been minor, Yuanta Polaris Securities Investment Trust Co (元大寶來投信) fund manager Betty Chen (陳思蓓) said yesterday.
Chen said that so far this year, foreign institutional investors had bought a net NT$320 billion (US$10.45 billion) worth of local shares, so foreign investors remain upbeat about the local bourse on the back of sound economic fundamentals, despite MSCI Inc deciding overnight to lower Taiwan’s weighting in two of its indices.
In Taipei trading yesterday, the benchmark TAIEX ended up 21.60 points, or 0.24 percent, at 8,912.62 on turnover of NT$67.67 billion, down from NT$70.77 billion the previous session.
At its semi-annual index review, MSCI lowered Taiwan’s weighting in the MSCI Emerging Markets Index and the MSCI All Country Asia Index excluding Japan to 11.96 percent and 15.27 percent, respectively, down from 12.06 percent and 15.37 percent.
However, the global index provider has left Taiwan’s weighting in the MSCI All Country World Index unchanged at 1.32 percent.
The decision is the fifth consecutive cut for the nation in the MSCI Emerging Markets Index.
RECOVERY
Chen said the economy is on the way to recovery, citing the economic composite index released by the National Development Council which flashed a green light to signal stable conditions for the eighth consecutive month in September.
She also referred to the nation’s 10.3 percent year-on-year increase in the industrial production index compiled by the Ministry of Economic Affairs for September, which came after a 6.89 percent rise in August, indicating that the pace of economic recovery has been accelerating.
CONFIDENCE
Although the TAIEX has been facing technical resistance at about 9,000 points, Chen predicted the bourse would move ahead after a period of consolidation.
After the uncertainty ahead of the Nov. 29 elections passes, investors are expected to return to the trading floor and resume buying, Chen said.
Meanwhile, MSCI has decided to raise the weighting of 12 Taiwanese stocks in the indices after the latest review, while cutting the weighting of eight other stocks.
MSCI said that flat-panel maker Innolux Corp (群創) has seen its weighting raised by 0.013 percentage points, the largest increase among the 12 stocks.
The index provider cut the weighting of contract PC maker Wistron Corp (緯創) by 0.009 percentage points, the steepest reduction among the eight that were cut.
Meanwhile, six Taiwanese stocks — including chip packaging and testing services provider ChipMOS Technologies Inc (南茂) and computer peripheral device supplier Ennoconn Corp (樺漢) — have been added to the MSCI Global Small Cap Indexes, while 45 have been removed.
Among the 45 Taiwan stocks removed were touchpanel supplier Wintek Corp (勝華), mid-sized international carrier TransAsia Airways Corp (復興航空), consumer electronics distributors Tsann Kuen Enterprise Co (燦坤) and E-Life Mall Corp (全國電子), and Da Cin Construction Co (達欣).
The adjustments are scheduled to take effect after the market closes on Nov. 29, MSCI said.
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