Impact of MSCI Taiwan index weighting cuts minimal: analyst

Taipei, May 14 (CNA) Taiwan’s latest weight reduction in part of major global indexes from index provider MSCI Inc has had minimal impact on the local stock market as investors pay more attention to market fundamentals. country, according to an analyst.

Despite MSCI’s decision to lower Taiwan’s weighting in two of its major indexes early Friday morning (Taiwan time), the weighted index (Taiex) on the Taiwan Stock Exchange (TWSE) climbed 215.86 points, or 1.38%, to end at 15,832.54 on a technical rebound on the day, after falling 2.43% the previous session.

Based on Taiex’s performance on Friday, Yeh Hsien-wen (葉獻文), vice president of PGIM’s High Growth Fund, said many investors had not reacted to MSCI’s reduction in Taiwan’s weighting. focusing on economic fundamentals, corporate profitability and market sentiment. .

MSCI announced its decision to reduce Taiwan’s weighting in the MSCI Emerging Markets Index, which is closely watched by foreign institutional investors, by 0.11 percentage points to 15.56% and to reduce the country’s weighting in the MSCI All-Country Asia ex-Japan index of 0.11%. points to 17.9% after its last revision of the index.

It was the 13th time in a row that Taiwan’s weighting was reduced on both indices.

However, MSCI also decided to increase Taiwan’s weighting in the MSCI All-Country World Index by 0.01 percentage point to 1.71%.

The index adjustments are expected to take effect after the market closes on May 31.

Reviews of the MSCI index are carried out in February, May, August and November of each year.

In the latest index adjustments, China saw the largest increase in its weighting in the MSCI Emerging Markets Index of 0.32 percentage points, followed by Indonesia, which recorded an increase of 0.03 percentage point, while India suffered the largest weight reduction of 0.17 percentage points.

Taiwanese companies added, removed from MSCI indices

In addition, MSCI added China Airlines (CAL), EVA Airways, contract chipmaker Powerchip Semiconductor Manufacturing Corp. and wire and cable supplier Walsin Lihwa Corp. to its global standard indices. Market analysts said the inclusion demonstrates the recent gains made by these stocks.

However, MSCI withdrew metal enclosure supplier Foxconn Technology Co., which is a subsidiary of iPhone assembler Hon Hai Precision Industry Co., machine brand Hiwin Technologies Corp. and drug developer Oneness Biotech Co. from its Global Standard Indexes.

While CAL, EVA Air, Powerchip Semiconductor and Walsin Lihwa, along with three others, were removed from the MSCI Global Small Cap Index, Foxconn Technology Co., Hiwin Technologies and Oneness were included in the MSCI Global Small Cap Index .

Fourteen additional Taiwanese stocks, including Evergreen Steel Corp., Lian Hwa Foods Corp., Great Tree Pharmacy Co. and semiconductor supplier Etron Technology, Inc., were also added to the MSCI Global Small Cap Index.

After the index revision, the number of companies on the MSCI Taiwan Index fell from 86 to 87, with Powerchip Semiconductor enjoying the biggest 0.42 percentage point increase in weighting and Hiwin seeing the biggest reduction. weighting of 0.19 percentage points.

Allianz Global Investors said inflation and monetary policy adjustments by the US Federal Reserve are expected to continue to dictate the course of the local stock market in the near term.

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