Thu, Feb 13, 2025 page9

• MSCI to raise local weighting in three indices

  ATTRACTIVE: Amid rising AI demand, more institutional investors would want exposure to Taiwan’s leading chipmakers, a Cathay Futures Consultant analyst said

  • By Crystal Hsu / Staff reporter
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  Global index provider MSCI Inc yesterday announced it would increase Taiwan’s weighting across three key indices, as local shares perform well, driven by the artificial intelligence (AI), semiconductor and high-tech sectors.

  Taiwan’s weighting in the MSCI All Country World Index is to rise by 0.02 percentage points, while it is increase by 0.14 percentage points and 0.13 percentage points in the MSCI Emerging Markets Index and the MSCI AC Asia ex Japan Index respectively, it said.

  Following the adjustments, which are to take effect after the end of trading on Feb. 27, Taiwan’s weightings in the indices would rise to 1.96 percent, 20.16 percent and 22.89 percent respectively, it said.

  

  A woman holding a smartphone stands in front of an electronic stock board at the Taiwan Stock Exchange in Taipei on Dec. 31 last year.

  Photo: CNA

  The quarterly adjustments reflect price changes in component stocks and do not necessarily suggest capital movements in the market, the Taiwan Stock Exchange said in a statement.

  However, the indices serve as market performance monitors, offering insights into Taiwan’s economic and industrial trends, it said.

  The heavily tracked indices would also tweak the MSCI Taiwan components.

  It would add printed circuit board supplier Elite Material Co (台光電) and Lotes Co Ltd (嘉澤), which makes connectors and other electronic components.

  It would remove DRAM chipmaker Nanya Technology Corp (南亞科技) and Walsin Lihwa Corp (華新麗華), a maker of cold finished bars, it said.

  Stocks added to MSCI indices would undergo a short-term price surge due to increased buying pressure from index-tracking funds. Stocks removed might experience selling pressure as funds adjust their portfolios. The total number of MSCI Taiwan stocks remains unchanged at 88.

  MSCI also said it would trim the weighting of Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) by 0.3 percentage points to 54.57 percent, as share prices in the world’s chipmaker soared more than 80 percent last year.

  Likewise, the weighting of chip designer MediaTek Inc (聯發科) would slide after a 52 percent spike in the share prices last year.

  Fubon Securities Investment Services Co (富邦投顧) chairman Edward Chen (陳奕光) said the adjustment would have little influence on TSMC as the chipmaker remains Taiwan’s largest MSCI component and has firm support of major passive mutual funds, including Taiwan’s labor insurance and pension funds.

  Cathay Futures Consultant Co (國泰證期) analyst Tsai Ming-han (蔡明翰) said the MSCI adjustments would benefit the local exchange when global investors cut exposure to riskier markets and seek stable and high-tech-focused economies.

  With AI demand rising, more institutional investors would want exposure to Taiwan’s leading chipmakers, Tsai said.

  In contrast to the increase of Taiwanese equities’ weighting by MSCI, the index compiler further trimmed Chinese stocks from its global benchmarks, underscoring the market’s diminishing appeal among investors despite a recent rebound.

  MSCI said it would cut 20 stocks from the MSCI China Index, following more than 200 removals last year, while eight new constituents would be added.

  The changes would also apply to the MSCI All Country World Index, it said.

  Among other notable changes, MSCI removed 11 stocks from the MSCI Korea Index, while adding none. It culled nine from Japan and added one.

  Additional reporting by Bloomberg
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