Morgan Stanley Capital International (MSCI) announced overnight it would increase the weighting of Taiwanese shares in its equity indexes, but the news failed to boost local shares as institutional investors continued a selling spree, dragging stocks 1.87 percent lower yesterday.
The benchmark TAIEX fell 120.97 points to 6,364.17, moving between a session high of 6,435.41 and a low of 6,339.47. Turnover was NT$162.66 billion (US$4.94 billion) on the Taiwan Stock Exchange, up from NT$159.84 billion a day earlier.
Foreign institutional investors sold a net NT$12.1 billion in shares yesterday, domestic proprietary traders sold a net NT$886 million and domestic investment trust companies offloaded a net NT$286 million, stock exchange data showed.
SinoPac Securities Corp (永豐金證券) said in a client note yesterday that share prices were pushed down by Premier Liu Chao-shiuan’s (劉兆玄) cautious comments on the recent rise in the stock market in an interview with the Chinese-language Commercial Times, as well as the drop on Wall Street overnight.
In its semiannual index review, MSCI said 22 local securities would be added to the MSCI Taiwan Index, while ProMOS Technologies Inc (茂德) would be the only stock to be removed.
New additions to the MSCI Taiwan Index would include technology stocks such as keyboard maker Chicony Electronics Co (群光), computer makers Clevo Co (藍天電腦) and Micro-Star International Corp Ltd (微星科技), panel material supplier Coretronic Corp (中強光電), chip designers VIA Technologies Inc (威盛), Global Unichip Corp (創意電子) and Phison Electronics Corp (群聯電子), chip image sensor maker PixArt Imaging Inc (原相科技), laptop battery producer Simplo Technology Co (新普科技), computer memory chipmaker Winbond Electronics Corp (華邦電子) and touch-panel maker Young Fast Optoelectronics Co (洋華光電).
Non-tech stocks to be added would include Farglory Land Development Co (遠雄), Evergreen International Storage and Transport (長榮國際儲運) and Formosa International Hotels Corp (晶華).
Estimates by Merrill Lynch and Citigroup analysts said the weighting of Taiwanese stocks in the MSCI Asia Index excluding Japan could rise to 17.9 percent from 16.9 percent. The weighting in the MSCI Global Emerging Market Index is estimated to increase to 12.5 percent from 11.6 percent.
The changes will take effect as of the market close on May 29, a statement released by the global index provider said.
“The MSCI announcement came as no surprise to investors and was in line with their expectations,” Alan Tseng (曾炎裕), an analyst at Capital Securities Corp (群益證券), said by telephone. “The benefits will not materialize in the short-term and the news will not stop foreign fund managers from dumping their shares.”
Even so, most of the new MSCI picks saw shares rise yesterday, led by VIA and Wintek Corp (勝華), a leading supplier of mobile phone displays. Local computer chip designer VIA closed limit-up at NT$15.05 and Wintek ended limit-up at NT$20.25.
Shares of debt-ridden ProMOS Technologies Inc (茂德科技) fell limit-down to NT$1.41 following the announcement of the removal of the stock from the MSCI Taiwan Index. The Hsinchu-based computer memory chipmaker reported a net loss of NT$8.6 billion in the first quarter of the year.
Last year alone, ProMOS posted a net loss of NT$36.1 billion. The loss was the second-largest among major local makers of memory chips after bigger rival Powerchip Semiconductor Corp’s (力晶半導體) NT$57.53 billion.
ADDITIONAL REPORTING BY JERRY LIN
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