A move by MSCI Inc to cut Taiwan’s weighting in two of its major indices is expected to prompt foreign institutional investors to remit about NT$1.1 billion (US$37.49 million) out of the nation, an estimate by the Financial Supervisory Commission (FSC) showed.
A fund drain following MSCI’s latest weighting cut was expected to hit about US$38 million, Securities and Futures Bureau (SFB) Chief Secretary Chien Hung-ming (簡宏明) said before the start of the Lunar New Year holiday last week.
However, the fund outflow was unlikely to have an adverse impact on the local equity market, as the money is dwarfed by NT$1.37 trillion in market capitalization owned by foreign institutional investors, Chien said.
MSCI announced on Tuesday that after a quarterly index review it had decided to cut Taiwan’s weighting in the MSCI Emerging Markets Index by 0.01 percentage point to 11.47 percent, and its weighting in the MSCI All-Country Asia ex-Japan Index by 0.01 percentage point to 13.30 percent.
Taiwan’s weighting in the MSCI All-Country World Index was cut by 0.01 percentage point to 1.38 percent, it said.
MSCI conducts index reviews in February, May, August and November every year.
Its latest adjustments are scheduled to take effect after the Taiwan Stock Exchange closes on Feb. 27.
The last trading session of Taiwan’s stock market ahead of the Lunar New Year holiday was Monday last week, so there was no immediate reaction from the market.
The TAIEX closed up 0.48 percent that day at 10,421.09 points on the back of a higher Wall Street.
Trading is scheduled to resume on Wednesday.
MSCI’s adjustments in Taiwan’s weighting are no longer the only factor moving local share prices at a time when the TAIEX is trading above 10,000 points, with local economic fundamentals growing at a stable pace on the back of solid global demand, JPMorgan Asset Management Taiwan Ltd (摩根資產管理) executive director James Yeh (葉鴻儒) said.
Yeh said that he expected the companies listed on the Tawain Stock Exchange to report a 10 percent year-on-year increase in profit for this year, which could make their shares attractive to foreign investors.
The average dividend yield of Taiwan’s equities — the ratio of a company’s dividend payout to its share price — have been ranging about 4 percent, another factor boosting foreign institutional buying interest in local shares, Yeh added.
Foreign institutional investors make up about 40 percent of the total market value of Taiwan’s equity market in reflection of the nation’s continued efforts to boost the stock market’s globalization, he said.
Such efforts in globalization are expected to encourage foreign investors to move more funds into Taiwan, he said.
RETHINK? The defense ministry and Navy Command Headquarters could take over the indigenous submarine project and change its production timeline, a source said Admiral Huang Shu-kuang’s (黃曙光) resignation as head of the Indigenous Submarine Program and as a member of the National Security Council could affect the production of submarines, a source said yesterday. Huang in a statement last night said he had decided to resign due to national security concerns while expressing the hope that it would put a stop to political wrangling that only undermines the advancement of the nation’s defense capabilities. Taiwan People’s Party Legislator Vivian Huang (黃珊珊) yesterday said that the admiral, her older brother, felt it was time for him to step down and that he had completed what he
ROLLER-COASTER RIDE: More than five earthquakes ranging from magnitude 4.4 to 5.5 on the Richter scale shook eastern Taiwan in rapid succession yesterday afternoon Back-to-back weather fronts are forecast to hit Taiwan this week, resulting in rain across the nation in the coming days, the Central Weather Administration said yesterday, as it also warned residents in mountainous regions to be wary of landslides and rockfalls. As the first front approached, sporadic rainfall began in central and northern parts of Taiwan yesterday, the agency said, adding that rain is forecast to intensify in those regions today, while brief showers would also affect other parts of the nation. A second weather system is forecast to arrive on Thursday, bringing additional rain to the whole nation until Sunday, it
CONDITIONAL: The PRC imposes secret requirements that the funding it provides cannot be spent in states with diplomatic relations with Taiwan, Emma Reilly said China has been bribing UN officials to obtain “special benefits” and to block funding from countries that have diplomatic ties with Taiwan, a former UN employee told the British House of Commons on Tuesday. At a House of Commons Foreign Affairs Committee hearing into “international relations within the multilateral system,” former Office of the UN High Commissioner for Human Rights (OHCHR) employee Emma Reilly said in a written statement that “Beijing paid bribes to the two successive Presidents of the [UN] General Assembly” during the two-year negotiation of the Sustainable Development Goals. Another way China exercises influence within the UN Secretariat is
CHINA REACTS: The patrol and reconnaissance plane ‘transited the Taiwan Strait in international airspace,’ the 7th Fleet said, while Taipei said it saw nothing unusual The US 7th Fleet yesterday said that a US Navy P-8A Poseidon flew through the Taiwan Strait, a day after US and Chinese defense heads held their first talks since November 2022 in an effort to reduce regional tensions. The patrol and reconnaissance plane “transited the Taiwan Strait in international airspace,” the 7th Fleet said in a news release. “By operating within the Taiwan Strait in accordance with international law, the United States upholds the navigational rights and freedoms of all nations.” In a separate statement, the Ministry of National Defense said that it monitored nearby waters and airspace as the aircraft