An exchange-traded note (ETN) tracking top suppliers to Apple Inc is to be the first ever ETN to be traded on the Taiwan Stock Exchange (TWSE) when it is launched at the end of April, Fubon Securities Co (富邦證券) said yesterday.
Like exchange-traded funds, ETNs are designed to track an underlying index or an underlying stock, but they have a maturity date, like bonds.
They represent a type of financial derivative that authorities are hoping can diversify the product mix of local equity markets.
Fubon Securities, a fully owned subsidiary of Fubon Financial Holding Co (富邦金控), said that the ETN would trace the TIP Customized Big Apple Total Return Index compiled and managed by Taiwan Index Plus Corp (TIP, 台灣指數), a wholly owned subsidiary of TWSE that compiles indices.
The index is comprised of the nation’s 10 biggest Apple suppliers by free-flow market capitalization that meet liquidity conditions and are financially stable.
Included in the index are smartphone camera lens maker Largan Precision Co (大立光), power management solution supplier Delta Electronics Inc (台達電), integrated circuit packaging and testing firm ASE Technology Holding Co (日月光), contract chipmaker Taiwan Semiconductor Manufacturing Co (台積電) and iPhone assembler Hon Hai Precision Industry Co (鴻海).
The remaining five are metal casing maker Catcher Technology Co (可成), Apple Watch assembler Quanta Computer Inc (廣達), chip resistor maker Yageo Corp (國巨), iPhone assembler Pegatron Corp (和碩) and computer peripheral maker Lite-On Technology Corp (光寶科技).
TIP would review the index once a year after Apple updates its list of global suppliers, Fubon Securities said.
The securities house is planning to list another ETN on the Taipei Exchange that would track the TIP Highlight 20 Equal Weight Total Return Index, which is comprised of 20 stocks that have high dividends and growth potential in the electronics, financial and old economy sectors.
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