MSCI raises Taiwan's weighting in 2 indexes

2017/08/11 16:41:54 fontsize-small fontsize-default fontsize-big
MSCI raises Taiwan's weighting in 2 indexes

Taipei, Aug. 11 (CNA) MSCI Inc., a global index provider, has raised Taiwan's weighting in two of its indexes after a quarterly index review, the first time the company has done so in four years.

In a statement posted on its website overnight, the index provider said that Taiwan's weighting in the MSCI Emerging Markets Index, which is closely watched by foreign investors, had risen to 12.09 percent from 12.07 percent.

In addition, MSCI has also upgraded Taiwan's weighting on the MSCI All-Country Asia ex-Japan Index by 0.01 percentage points to 14.01 percent, it said.

The move was the first upgrade of Taiwan's weighting in the two indexes since the third quarter of 2013, when MSCI raised the country's weighting in the MSCI Emerging Markets Index by 0.01 percentage points and 0.02 percentage points in the MSCI All-Country Asia ex-Japan Index.

MSCI said, however, that it has decided to leave Taiwan's weighting in the MSCI All-Country World Index unchanged at 1.39 percent.

The index adjustments will become effective after the local equity market closes on Aug. 31, MSCI said.

Market analysts said that the upgrade in Taiwan's weighting in the two indexes reflects a strong showing by local equities in recent sessions, in particular after the weighted index on the Taiwan Stock Exchange breached the 10,000-point mark in mid-May for the first time in 17 years and continued to move higher in June and July.

Since the beginning of May, the weighted index on the main board has gained 4.64 percent. On Friday, the index appeared resilient amid political tension between the United States and North Korea, to close down only 0.17 points at 10,329.57.

Chen Si-bei (陳思蓓), manager of the Yuanta P-shares MSCI Taiwan ETF Fund, said that Taiwan's weighting upgrade of 0.02 percentage points in the MSCI Emerging Markets Index was the highest among all emerging markets covered by the index.

However, Russia, Qatar, Mexico and South Korea suffered the steepest cuts in the MSCI Emerging Markets Index of 0.01 percentage points, Chen said.

Chen said that the upgrade of Taiwan's weighting in the two MSCI indexes is expected to help the main board to maintain its strength above the 10,000-point mark, while a continued recovery in the local economy has also paved the way for a stronger equity market.

She said that Taiwan's economy has benefited from solid global demand, with exports for July continuing to grow at a double-digit pace of 12.5 percent year-on-year, adding that local manufacturing activity kept expanding during the month, with the manufacturing sector's purchasing managers index (PMI) for July up 1.4 points from a month earlier at 59.0.

Despite the growing economy, Chen said, investors had better pay close attention to rising geopolitical tensions since Pyongyang has threatened to launch missile attacks on U.S. Pacific territory Guam and U.S. President Donald Trump has maintained strong rhetoric against North Korea.

The analyst said that such non-economic factors could continue to stir up selling in Taiwan and other emerging markets in the short term.

(By Han Ting-ting and Frances Huang)
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