MSCI cuts Taiwan's weighting in equity indexes

2017/05/16 14:46:32 fontsize-small fontsize-default fontsize-big
MSCI cuts Taiwan's weighting in equity indexes

Taipei, May 16 (CNA) Taiwan's weighting in two indexes compiled and managed by MSCI Inc. has been cut after the global index provider completed its semi-annual index review.

In an announcement made overnight, MSCI said Taiwan's weighting in the MSCI Emerging Markets Index, which is closely watched by foreign investors, has been lowered to 12.04 percent from 12.09 percent after remaining unchanged following the previous review.

Taiwan's weighting in the MSCI All-Country Asia ex-Japan Index was also lowered, to 14.11 percent from 14.14 percent, but the country's weighting in the MSCI All-Country World Index was kept at 1.33 percent, MSCI said.

In addition to the cut in Taiwan's weighting in two of its indexes, MSCI decided to add Taiwan High Speed Rail Corp. (THSRC, 台灣高鐵) and silicon wafer supplier GlobalWafers Co. (環球晶圓) to the MSCI Global Standard Indexes after the review.

THSRC's weighting in the MSCI indexes was 0.24 percent after the stock was included in the MSCI Global Standard Indexes. The increase in THSRC's weighting from zero previously was the highest rise among the 13 Taiwanese stocks whose weighting was hiked by MSCI.

The weightings of GlobalWafers, Formosa Plastics Corp. (台塑), China Steel Corp. (中鋼), Standard Foods Corp. (佳格) and Hotai Motor Corp. (和泰汽) were also raised.

MSCI also lowered the weightings of 15 stocks listed in Taiwan in its indexes, with Formosa Chemicals & Fibre Corp. (台化) suffering the steepest cut of 0.18 percentage points.

According to the index provider, First Financial Holding Co. (第一金), metal casing maker Casetek Holdings Ltd. (鎧勝), Hua Nan Financial Holding Co. (華南金), Chang Hwa Commercial Bank (彰銀), integrated circuit packaging and testing firm Siliconware Precision Industries Co. (矽品), and Eclat Textile Co. (儒鴻) had their weightings lowered, among others.

Chen Si-bei (陳思蓓), manager of the Yuanta P-shares MSCI Taiwan ETF Fund, said she remained upbeat about Taiwan's stock market outlook because of improving economic fundamentals, even if MSCI cut the country's weighting in two of its indexes.

Chen said the local manufacturing sector's purchasing managers index (PMI) expanded for the 14th consecutive month in April, which was a positive sign for Taiwan's economy.

Still, investors should be aware of the possibility of a technical pullback in Taiwan and other emerging markets in the short term after their recent strong showings driven by rising expectations that the U.S. Federal Reserve will raise key interest rates in June, Chen said.

According to the fund manager, India's weighting in the MSCI Emerging Markets Index was raised by 0.19 percentage points, the highest increase among the emerging markets.

Indonesia suffered the steepest drop, with its weighting cut by 0.10 percentage points, followed by South Korea's 0.09 percentage point cut.

(By Jeffery Wu and Frances Huang)

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