Sat, Aug 15, 2015 - Page 13 News List

MSCI trims TAIEX weight for eighth consecutive quarter

EXPECTED DECLINE:The trimming of the market’s weighting should have a short-term effect, since it was expected as exports and technologies slow, an analyst said

By Lauly Li  /  Staff reporter

Morgan Stanley Capital International (MSCI) reduced the TAIEX’s weight for the eighth straight quarter, prompting a downturn in the TAIEX of 0.07 percent.

The TAIEX yesterday dropped to 8,365.64 on turnover of NT$72.23 billion (US$2.23 billion).

The global stock index provider yesterday trimmed Taiwan’s weighting in the Emerging Markets Index from 12.54 percent to 12.5 percent and the weighting in the Asia ex-Japan Index from 14.87 percent to 14.83 percent.

However, MSCI increased Taiwan’s weighting in its All-Country World Index from 1.26 percent to 1.27 percent.

The revision is to take effect on Sept. 1.

JPMorgan Asset Management (摩根投信) fund manager James Yeh (葉鴻儒) said that although Taiwan’s weighting in the two indices have been cut by MSCI for the eighth consecutive quarter, the size of the downgrade of 0.04 percentage points in the indices was smaller than MSCI’s previous cut in May.

“The changes are minor and would only affect the local equity market for a short period of time,” Yeh said in a press statement, adding that the fundamental issues of corporate earnings results and industry outlook are the key factors to affect the TAIEX’s trend in the long term.

Yeh said the nation’s continual annual decline in exports and some leading technology companies’ earnings results last quarter suggested that Taiwan’s growth momentum has been slowing recently and it is inevitable that the TAIEX would be affected.

However, the summer holidays, the back-to-school shopping spree and the traditional peak season in the fourth-quarter of the year may boost the shipment performance of Taiwanese companies, which would likely stimulate the TAIEX’s performance.

In the quarterly review, MSCI did not add or remove any Taiwanese stocks from either the MSCI Global Small Cap Index or MSCI Global Standard Index.

Among the 96 individual stocks chosen by MSCI, the global stock index provider reduced the weighting of Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) by 0.06 percentage points in its indices, which is the deepest cut among other individual stocks.

Weighting of Pegatron Corp (和碩), which assembles Apple Inc’s iPhone models, was increased 0.16 percentage points by MSCI, the largest increase among the stocks upgraded by MSCI.

Following the adjustments by the international stock index provider, TMSC shares dropped 1.56 percent to NT$126, with foreign institutional investors selling 4.3 million TSMC shares, according to Taiwan Stock Exchange’s data.

The stock price of Pegatron surged 2.51 percent to close at NT$89.7, with foreign institution investors buying 4.35 million of Pegatron’s shares, the data showed.

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