Global index provider MSCI Inc yesterday announced that it would trim Taiwan’s weighting in two of its major indices and leave it unchanged in another in keeping with a quarterly index review.
The company said it would leave Taiwan’s weighting intact in the MSCI All Country World Index at 1.98 percent, while cutting Taiwan’s weighting in the MSCI Emerging Markets Index by 0.32 percentage points to 19.1 percent and drop its weighting in the MSCI All-Country Asia ex-Japan Index by 0.18 percentage points to 21.94 percent.
The adjustments would take place at the end of the trading session on Aug. 30 and would inflate the day’s turnover.
Photo: CNA
Stocks are added or removed from an index by analysts within MSCI to ensure that the index still acts as an effective equity benchmark for the market it represents.
The investment company reviews its indices on a quarterly basis in February, May, August and November each year.
MSCI said it would increase the weighting of Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) by 0.2 percentage points to 51.22 percent, as it expects the world’s largest maker of advanced chips would emerge as a major beneficiary of an artificial intelligence boom.
MSCI said it would remove Formosa Petrochemical Corp (台塑石化) from the Taiwanese components.
Analysts said the removal reflected a decline in the share price of Formosa Petrochemical, which was down by almost 21 percent since the beginning of this year as of Monday.
MSCI would add 14 Taiwanese stocks to its MSCI Global Small Cap Indexes, including electronics component maker Chenming Electronic Tech Corp (晟銘電子), IC packaging and testing services provider Elite Advanced Laser Corp (聯鈞光電) and diode product supplier Eris Technology Corp (德微科技), it said.
Among the other Taiwanese stocks to be added are automotive electronics provider G-Shank Enterprise Co (鉅祥企業), Huang Hsiang Construction Corp (皇翔建設), electronic components maker Jess-Link Products Co (佳必琪國際) and building materials supplier Wang Chang General Contractor Co (皇昌營造), it added.
It is to remove convenience store chain operator Taiwan FamilyMart Co (全家便利商店) from the MSCI Global Small Cap Indexes, it said.
The adjustments were scheduled to go into effect after markets close on Aug. 30, it added.
Passive funds linked to the indices totaled US$15 trillion, making their adjustments closely monitored.
Shares in all the 14 stocks that are to join the MSCI small-cap basket picked up yesterday, although the TAIEX shed points for most of the session, but staged a last-minute 0.11-percent rally to 21,796.57, Taiwan Stock Exchange data showed.
Daily turnover tapered to a lackluster NT$342.750 billion (US$10.56 billion).
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