Bumped from Major MSCI Indices, Taiwan Makes Room for Three New Stocks
MSCI decreases representation of Taiwan in two indexes; leaves one index unaffected.
The global index provider, MSCI Inc, has made some tweaks to Taiwan's representation in its significant indexes after a routine review. Interestingly, while Taiwan's weighting dropped in the MSCI Emerging Markets Index and the MSCI All-Country Asia ex-Japan Index, it managed to maintain its position in the MSCI All-Country World Index.
In a move that won't please Taiwanese investors, MSCI announced that it has decreased Taiwan's weighting in the MSCI Emerging Markets Index from 16.64% to 16.56%, and in the MSCI All-Country Asia ex-Japan Index from 19.04% to 18.99%. No adjustments were made to its weighting in the MSCI All-Country World Index, which remained at 1.74%.
Shares Surging, Three Taiwanese Startups Join Global Small Cap Index
One tangible outcome of these adjustments is the inclusion of three Taiwanese companies - Advanced Echem Materials Co, EZconn Corp, and Taiwan Specialty Chemicals Corp - in the MSCI Global Small Cap Indexes. These companies experienced a surge in their share prices, with Advanced Echem Materials and Taiwan Specialty Chemicals closing at NT$539 and NT$211 respectively - marking a 10% increase - and EZconn Corp ending the day up 7.04% at NT$463.5.
But don't worry. Some Taiwanese companies were still fortunate enough to retain their positions in the MSCI Taiwan Index. Although some constituents saw weighting changes, the index's total number of stocks remains steady at 88. The most influential shift came from PharmaEssentia Corp, which experienced a 0.02 percentage point increase in weighting, bringing it to 0.31%. On the flip side, Taiwan Mobile Co saw its weighting decrease by the same margin, landing at 0.49%.
Meanwhile, 24 Taiwanese companies were bid farewell from the MSCI Global Small Cap Indexes. These include familiar names such as Actron Technology Corp, Diamond Biofund Inc, Dynamic Holding Co, Farglory FTZ Investment Holding Co, and TPK Holding Co.
It's essential to note that the reasons behind the weight changes are not explicitly mentioned by MSCI. Typically, these shifts are influenced by changes in market capitalization, economic factors, and other aspects that impact the indices' composition and weightings. That being said, the indices are reevaluated regularly to ensure they reflect the current market landscape and investors' preferences.
Insights:
- MSCI indices are reviewed regularly to reflect current market conditions and investors' preferences.
- Companies are usually included in MSCI indexes based on market capitalization, liquidity, domicile, and operational requirements.
- Possible factors for the inclusion of Advanced Echem Materials, EZconn Corp, and Taiwan Specialty Chemicals in the MSCI Global Small Cap Indexes are market size, liquidity, and adherence to MSCI's inclusion criteria.
The reevaluation of MSCI indices indicates a change in the market landscape, allowingfor the inclusion of three Taiwanese startups - Advanced Echem Materials Co, EZconn Corp, and Taiwan Specialty Chemicals Corp - in the MSCI Global Small Cap Indexes, thanks to their significant market size, liquidity, and compliance with MSCI's criteria. Businesses in the tech sector, such as these startups, are increasingly leveraging finance and technology to gain global recognition and accession to key indexes like MSCI.
