MSCI cuts Taiwan's weighting in 2 indexes

Taipei, Aug. 13 (CNA) MSCI Inc., a global index provider, has decided to cut Taiwan's weighting in two of its major indexes but leave Taiwan's weighting unchanged in a third after a quarterly index review.

MSCI, which released the results of the quarterly index review early Tuesday morning Taipei time, said it has lowered Taiwan's weighting in the MSCI Emerging Markets Index, which is closely watched by foreign institutional investors, by 0.32 percentage points to 19.01 percent.

The index provider has also cut Taiwan's weighting in the MSCI All-Country Asia ex-Japan Index, to 21.94 percent from 22.12 percent, while Taiwan's weighting in the MSCI All-Country World Index stayed unchanged at 1.98 percent.

After the index review, MSCI decided to remove Formosa Petrochemical Corp. from the MSCI Global Standard Indexes but not to add any Taiwanese stocks to the index.

Analysts said the removal reflected a decline in the share price of Formosa Petrochemical, which is under the corporate umbrella of the conglomerate Formosa Plastics Group, in recent sessions.

Since the beginning of this year, shares of Formosa Petrochemical had fallen almost 21 percent to NT$63.90 (US$1.97) as of Monday.

MSCI has also decided to add 14 Taiwanese stocks to its MSCI Global Small Cap Indexes, including electronics component maker Chenming Electronic Tech. Corp., IC packaging and testing services provider Elite Advanced Laser Corp., and diode product supplier Eris Technology Corp.

Among the others are automotive electronics provider G-Shank Enterprise Co., Huang Hsiang Construction Corp., electronics component maker Jess-Link Products Co., and building material supplier Wang Chang General Contractor Co.

Meanwhile, MSCI decided to remove convenience store chain operator Taiwan FamilyMart Co. from the MSCI Global Small Cap Indexes.

As for the MSCI Taiwan index, the number of constituents was reduced to 87 after Formosa Petrochemical had its weighting reduced by 0.16 percentage points to zero, the index provider said.

The weighting of contract chipmaker Taiwan Semiconductor Manufacturing Co. in the MSCI Taiwan Index was increased to 51.22 percent, the highest among the 87 constituents.

MSCI said the latest index adjustments were scheduled to go into effect after markets close on Aug. 30.

MSCI index reviews are conducted in February, May, August and November each year, with indexes in U.S. dollar terms provided to professional investors to help guide their portfolio adjustments.