The latest adjustments to Taiwan’s weighting in MSCI indexes are expected to have little impact on the local bourse, as foreign institutional investors are moving funds into the nation, a fund manager said yesterday.
After a quarterly review, MSCI Inc has cut Taiwan’s weighting in the MSCI Emerging Markets Index and the MSCI All Country Asia Index ex-Japan to 12.43 and 15.15 percent respectively, down from 12.44 and 15.17 percent, according to Yuanta Securities Investment Trust (元大寶來投信).
However, the global index provider has left Taiwan’s weighting in the MSCI All Country World Index unchanged at 1.32 percent, Yuanta’s data showed.
It was the sixth consecutive quarter that the nation’s weighting was downgraded in the MSCI Emerging Markets Index.
Despite the latest index adjustments, Yuanta/P-shares MSCI Taiwan ETF Fund manager Chen Si-bei (陳思蓓) said that she remained upbeat about the indicies’ future movement.
Chen said that starting this year, foreign institutional investors have been preparing to increase their holdings in local shares, which has driven gains in the local equity market.
So far this year, foreign institutional investors have purchased shares worth a total of NT$105.2 billion (US$3.34 billion), Chen said. During the period, the weighted index on the Taiwan Stock Exchange gained more than 1.6 percent on the back of constant fund inflows.
Market analysts said that investors in Europe were the major buyers on the local bourse in recent sessions in the wake of a European Central Bank announcement of a US Federal Reserve-like quantitative easing program to begin next month.
Chen said that foreign institutional investors still own more long-position contracts than short-position agreements in the local futures market, which is paving the way for a further upturn in the spot market.
However, Chen said that investors should remain cautious about the debt problems in Greece, which is in talks on how to deal with its large debt.
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