MSCI raises Taiwan’s weighting – Taipei Times

PORTFOLIO REBALANCING:
The adjustments in three global equity indices reflect rising investor appetite for semiconductor and artificial intelligence-related stocks

• By Crystal Hsu /
  Staff reporter

Taiwan’s weighting in major global equity indices compiled by MSCI Inc is to rise modestly following the latest quarterly review, underscoring the market’s expanding role in emerging-market portfolios, as global investors continue to favor the nation’s technology sector.

Taiwan’s weighting in the MSCI Emerging Markets Index is to increase by 0.30 percentage points to 23.76 percent, after the changes take effect at the close of the May 29 session.

Its weighting in the MSCI All-Country Asia ex-Japan Index is to rise 0.37 percentage points to 27.16 percent, while that in the MSCI All Country World Index is to edge up slightly to 2.8 percent.

The adjustments reflect changes in market capitalization and index constituents rather than any direct signal of future fund flows, the Taiwan Stock Exchange said.

Nonetheless, the revisions are closely watched by investors, as global passive and institutional funds tracking MSCI benchmarks typically rebalance portfolios in line with the changes.

Taiwan has become one of the largest components in emerging-market indices, driven by the global dominance of its semiconductor supply chain and sustained investor enthusiasm for artificial intelligence (AI)-related stocks.

Prior to yesterday, the benchmark TAIEX had soared more than 44 percent since the beginning of this year. Gains in heavyweight chip and electronics shares have boosted the market’s capitalization and index representation.

Analysts said the latest increase in Taiwan’s weighting in the MSCI Emerging Markets Index is notable given its already elevated position in the benchmark, reinforcing its status as a key destination for global capital seeking exposure to AI and advanced chip manufacturing.

In MSCI’s Taiwan Index, changes would be relatively limited. Chip-testing equipment supplier MPI Corp (旺矽) is to be added, while Compal Electronics Inc (仁寶) and Catcher Technology Co (可成) are to be removed.

The number of constituents in the index is to fall to 77 from 83, while 17 existing members would see adjustments to their free-float shares.

Taiwan Semiconductor Manufacturing Co (台積電) is set to record the largest increase in index weighting, rising 0.56 percentage points to 58.33 percent, underscoring its dominant position in Taiwan’s equity market.

Within the broader MSCI Emerging Markets Index, Taiwan is to post the largest upward adjustment among all constituent markets, while Indonesia would see the steepest decline, with its weighting reduced by 0.23 percentage points.

Stock indices serve as a barometer of market performance, reflecting developments in the broader economy and industrial structure, the Taiwan Stock Exchange said.

The exchange said it would continue promoting listings of high-quality companies, strengthening corporate governance, and fostering a sound investment environment to attract domestic and foreign capital.