Weighting in two MSCI indexes cut
Taiwan’s weighting in the two indexes provided by MSCI Inc. have been cut after the global index provider’s quarterly index review, but market analysts said that the changes are minor and unlikely to have much impact on the local equity market as a whole.
According to the latest index adjustments announced by MSCI overnight, Taiwan’s weighting in the MSCI Emerging Markets Index has been cut by 0.04 percentage points to 12.5 percent. It was the eighth consecutive quarter in which MSCI lowered Taiwan’s weighting in the emerging market index.
Taiwan also witnessed its weighting in the MSCI All-Country Asia Index exJapan Index cut by 0.04 percentage points to 14.83 percent, while Taiwan’s weighting in the MSCI All- Country World Index has been raised to 1.27 percent from 1.26 percent.
After the quarterly review, MSCI has decided not to add or remove any Taiwanese stocks from either the MSCI Global Standard Index or the MSCI Global Small Cap Index.
Alex Huang, an analyst with Mega International Investment Services Corp., said that the magnitude of the downgrade in the MSCI Emerging Markets Index and MSCI All-Country Asia Index ex-Japan Index was small and that little impact on the local market is expected.
Huang said the decision on no change for Taiwanese constituents in the indexes is unlikely to affect the local market, either.
The weighted index on the Taiwan Stock Exchange closed down 0.07 percent at 8,305.64 Friday after the index changes.
As for individual stocks, MSCI has cut the weighting of Taiwan Semiconductor Manufacturing Co. (TSMC) by 0.06 percentage points in its indexes, the steepest reduction among the local stocks that suffered a cut in weighting after the quarterly index review.
Followed by the cut, shares of TSMC, the most heavily weighted stock in the local market, fell 1.56 percent to close at NT$126.00 (US$3.92) and the downturn led the local semiconductor sector to trend lower 1.28 percent at Friday’s close.
However, Pegatron Corp., a contract notebook computer maker that has entered the supply chain of Apple Inc. to assemble the iPhone, got a boost from a MSCI decision to raise the stock’s weighting in its indexes by 0.16 percentage points, the largest increase among the local stocks to be upgraded by the international index provider.
Shares of Pegatron closed up 2.51 percent Friday to close at NT$89.70, outperforming the broader market.
The latest index adjustments by MSCI are scheduled to go into effect after the market close Aug. 31.