Global index provider MSCI Inc announced yesterday it would raise Taiwan’s weighting in two of its major indices and hold it steady in a third index following a quarterly index review.
The heavily tracked passive index funds would grow Taiwan’s weighting in its MSCI Emerging Markets Index by 0.01 percentage points to 15.97 percent and increase it by 0.05 percentage points in the MSCI All-Country Asia ex-Japan Index to 18.75 percent. It would keep Taiwan’s weighting in the MSCI All Country World Index unchanged at 1.6 percent.
The tweaks, which are to be put into practice at the end of the trading session on Feb. 29, might bring liquidity into the local bourse, Taiwan Stock Exchange said in a statement.
Foreign institutional investors recently increased holdings in local shares, especially AI-concept plays, before the local bourse closed on Monday last week 5 to observe the week-long Lunar New Year holiday, it said.
However, passive investment funds in general take the closing price as the principle of trading to reduce tracking errors and volatility usually becomes evident when the adjustments are taking place, it said.
That means more funds could flow to the TAIEX when it resumes trading today after a 21.18 percent jump in the Year of the Rabbit to 18,096.07 points, the first time it had ended a lunar year above 18,000.
Foreign players, mutual funds and proprietary traders built up positions by a net NT$116.35 billion (US$3.71 billion), in line with the global pursuit of AI investments. Taiwan is home to contract makers of high-performance computing chips and AI servers.
The MSCI All-Country World Index, which captures large and medium stocks across 23 developed markets and 24 emerging markets, is to ditch Momo.com Inc (富邦媒), a Taiwanese online, TV and catalog shopping company, and keep other local constituents.
The index covers approximately 85 percent of the global investable equity opportunity set. It would give India a noticeable uptick and China a downgrade as a result of the latest review.
Small-cap network and communications chip supplier Airoha Technology Corp (達發科技), uninterruptible power gear maker Allis Electric Co (亞力電機), hinge designer Fositek Corp (富世達), ShunSin Technology Holdings (訊芯-KY), Grand Process Technology Corp (弘塑科技) and Diamond Biofund Inc (鑽石生技) would make the MSCI ACWI Small-Cap Index.
Stock indices shed considerable light on a market’s health and vigor while reflecting the performance of individual sectors and firms, TWSE said, adding that it would help promote the visibility of local shares on the world stage.
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