Taipei, Feb 12 (CNA) Global index provider MSCI Inc.’s decision to reduce Taiwan’s weighting in its indexes is unlikely to have a significant impact on the local stock market, as the outflow of foreign funds result is not expected to reach more than $56 million, according to the Financial Supervisory Commission (FSC).
On Thursday, it was announced that Taiwan’s weighting in the MSCI Emerging Markets Index, which is closely watched by overseas institutional investors, had been lowered by 0.02 percentage points to 16.37%, following a quarterly revision of the index.
Taiwan’s weight in the MSCI All-Country Asia ex-Japan index was also reduced from 18.70% to 18.56%, while the country’s weight in the MSCI All-Country World index was increased slightly from 1.90% to 1.91%.
The index adjustments are expected to take effect after the market closes on February 25.
Kuo Chia-chun (郭佳君), deputy director of the FSC’s Securities and Futures Office, said the adjustments will result in an outflow of foreign funds of around US$56 million, or around US$1.6 billion. NT dollars, or only 0.006% of the total market capitalization held. by foreign institutional investors on the local stock market.
The latest MSCI index adjustments are not a major factor in local stock market performance, she said, adding that industrial fundamentals and the economic and political climate carry more weight.
The data shows that companies listed on the main board and over-the-counter market generated NT$3.98 trillion in total sales in 2021, a year-on-year increase of 16.41%, while the average dividend yield last December was 2.56%, Kuo said.
These figures indicate that the Taiwanese market remains fundamentally healthy and should remain attractive to foreign institutional investors, she added.
In the quarterly review, the weighting of China and India in the MSCI Emerging Markets Index was raised by 0.07 percentage points, the largest increase, while Mexico suffered the largest drop by 0.05 percentage point.
In addition to index weighting adjustments, MSCI also added electronic paper supplier E Ink Holdings Inc. to its global standard indices and removed contract electronics maker Wistron Corp.
Market analysts said E Ink Holdings’ inclusion in the MSCI Global Standard indices reflected the stock’s strong performance in the local stock market in recent months.
E Ink was removed from the MSCI Global Small Cap indices, while Wistron was included.
As for the MSCI Taiwan Index, the component count was unchanged at 86, with E Ink receiving the biggest weighting increase of 0.38 percentage points, while Wistron’s weighting saw the biggest reduction. significant by 0.23 percentage points.
Reviews of the MSCI index are carried out in February, May, August and November of each year.
The Taiwan Stock Exchange, which manages the local main board, said it would continue to push for fundamentally sound companies to be listed on MSCI and seek to improve the local investment environment to attract institutional investors. strangers.