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MSCI cuts Taiwan’s weighing in 2 indexes, while upgrading it in another

MSCI Inc., a global index provider, has decided to lower Taiwan’s weighting in two of its major indexes but give an upgrade of the country’s weighting in another index after a semi-annual index review in November.

In a statement released on Friday (Taipei time), MSCI said it has cut Taiwan’s weighting in the MSCI Emerging Markets Index, which is closely watched by foreign institutional investors, to 14.12 percent by 0.08 percentage points, down from 14.20 percent previously after the index review.

It was the 11th consecutive quarter for MSCI to cut Taiwan’s weighting in the particular index.

According to MSCI, India enjoyed the largest upgrade of its weighting in the MSCI Emerging Markets Index at 0.16 percentage points among the emerging markets after the index review.

MSCI said it has also lowered Taiwan’s weighting in the MSCI All-Country Asia ex-Japan Index to 16.16 percent from 16.31 percent, while the index provider raised the country’s weighting slightly in the MSCI All-Country World to 1.69 percent from 1.68 percent.

The index adjustments are scheduled to go into effect after the market close on Nov. 30.

Following the index review, MSCI said it has decided to add intellectual property portfolio owner eMemory Technology Inc., high speed transmission integrated circuit designer Parade Technologies Ltd. and uninterruptible power system solution provider Voltronic Power Technology to the MSCI Global Standard Indexes.

Market analysts said the inclusion of the three stocks into the MSCI Global Standard Indexes reflected their strong showing on the local equity market in recent months.

Before Friday, eMemory and Parade shares had risen about 81 percent and 14 percent, respectively, on the local over-the-counter market since the beginning of August. During the same period, Voltronic shares had gained 28.7 percent on the local main board.

On the other hand, NAND Flash controller designer Phison Electronics Corp., IC packaging and testing services provider Powertech Technology Inc. and capacitor and resister supplier Walsin Technology Corp. has been deleted from the MSCI Global Standard Indexes.

After the index review, eMemory, Parade and Voltronic were also removed from the MSCI Global Small Cap indexes, while Phison, Powertech and Walsin Technology have been added to the global small cap indexes, according to MSCI.

In addition to Phison, Powertech and Walsin Technology, MSCI has also included seven other Taiwanese stocks such as e-commerce solution provider 91APP Inc. and automotive diode supplier Actron Technology Corp., into the MSCI Global Small Cap indexes.

Besides eMemory, Parade and Voltronic, MSCI has also removed 40 other Taiwanese stocks, such as smartphone camera lens maker Ability Opto-Electronics Technology Co., from the MSCI Global Small Cap indexes.

As for the MSCI Taiwan Index, the number of constituencies remained unchanged at 87, and among them, 18 stocks saw their weighting adjusted by the index provider, according to the MSCI.

eMemory enjoyed its weighting largest upgrade of 0.44 percentage points, while contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) saw its weighting falling to 45.01 percent, MSCI said.

Analysts said the local equity market is expected to get support from Taiwan’s strong economic performance as well as the government’s stimulus measures, including the NT$5,000 (US$180) spending vouchers to push up domestic consumption.

However, the COVID-19 pandemic is expected to create uncertainty for the global economy and eventually affect the financial markets worldwide, analysts said.

Source: Focus Taiwan News Channel