MSCI cuts Taiwan's weighting in 3 indexes

05/12/2021 06:50 PM
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CNA photo May 12, 2021
CNA photo May 12, 2021

Taipei, May 12 (CNA) MSCI Inc., a global index provider, has decided to cut Taiwan's weighting in three of its major indexes after a semi-annual index review in May.

In a statement released on its website Wednesday (Taipei time), MSCI said it has downgraded Taiwan's weighting in the MSCI Emerging Markets Index, which is closely watched by foreign institutional investors, to 13.95 percent after the index review, from 14.21 percent previously.

It was the ninth consecutive downgrade of Taiwan's weighting in that index.

MSCI said it has also lowered Taiwan's weighting in the MSCI All-Country Asia ex-Japan Index and in the MSCI All-Country World Index by 0.3 percentage points and 0.01 percentage points, respectively, to 15.72 percent and 1.81 percent.

China was given the largest weighting increase in the MSCI Emerging Markets Index by 0.71 percentage points, while Taiwan saw the steepest downgrade of 0.26 percentage points, according to MSCI.

Despite the downgrade, Taiwan's weighting was the second highest in the MSCI Emerging Markets Index, according to MSCI.

Meanwhile, MSCI decided to add Yang Ming Marine Transport Corp., one of the leading container cargo service providers in Taiwan, to the MSCI Global Standard Indexes.

MSCI also decided, however, to remove computer periphery supplier Chicony Electronics Co. and property developer Highwealth Construction Co. from the MSCI Global Standard Indexes.

The number of constituencies in the MSCI Taiwan Index fell to 86 from 87 after the index review, according to MSCI.

Yang Ming Marine's weighting increase of 0.26 percentage points was the biggest in the MSCI Taiwan Index, while Chicony Electronics' weighting downgrade of 0.16 percentage points was the steepest cut.

A research team for the Yuanta Daily Taiwan 50 Bull 2X ETF said Taiwan's stock market gains have been backed by an improvement in its economic fundamentals.

The team cited the composite index of monitoring indicators for March, which flashed a "red light," indicating strong growth to the point of overheating, for a second consecutive month.

Also, in late February, Taiwan's Directorate General of Budget, Accounting and Statistics forecast 4.64 percent GDP growth for 2021, an upgrade of 0.81 percentage points from an earlier estimate in November.

The recent spike in domestically transmitted COVID-19 cases has brought uncertainty to the market. However, as long as Taiwan is able to curb the infections, the local economy should continue to steam ahead, the team said.

On Wednesday, the Taiex, the weighted index on the Taiwan Stock Exchange, plunged 4.11 percent due to rising concerns over the rise in domestic COVID-19 cases.

The index adjustments are scheduled to take effect after the market closes on May 27.

(By Jeffrey Wu and Frances Huang)

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