2024/4/29 11:06 (updated at 4/29 16:37)
Schematic diagram of Taiwan stocks. (CNA file photo)
(Central News Agency reporter Zeng Renkai, Taipei, 29th) TSMC has staged “one man’s martial arts”. In the past three months as of April 26, TSMC’s share of the Taiwan stock market capitalization has exceeded 30% for 44 trading days. The market is expected to do so as soon as today The threshold of the “narrow-based index” may be reached, which may prevent U.S. foreign investors from trading Taiwan index futures and reduce the financial momentum of U.S. legal persons. What impact will it have on Taiwan stocks? Let’s sort out four key issues and grasp them at once.
Looking back at April 2021, the Taiwan Stock Index was classified as a narrow-based index because TSMC’s market value was too high. The ban was not lifted until October 2022. During this period, TSMC was sold by foreign investors for more than 800,000 shares, and the Taiwan Stock Index fell from 16,571 points. It fell to 12856 points; this time Taiwan stocks are once again facing the threat of the narrow-based index, and the market is ready.
What is a narrow-based index?
According to the provisions of the U.S. Commodity Exchange Act (CEA), in order to reduce the risk of U.S. investors, if a single component stock of a securities index accounts for more than 30% of the overall index weight for more than 45 trading days in three consecutive months, it will be classified as narrow. Based on securities indexes, the U.S. Commodity Futures Trading Commission (CFTC) will revoke its license, and investors in the United States, including retail investors and legal entities, are not allowed to trade narrow-based index futures.
Why might Taiwan stocks be included in narrow-based indexes?
TSMC leads the world in semiconductor manufacturing and has become Taiwan’s national protector. Especially in the past year or so, the trend of generative AI has driven a surge in demand for high-end chips. TSMC often performs “one-man martial arts”, and one company controls the Taiwan stock market. trend.
According to corporate statistics, from February 15, when the Year of the Dragon opened red, to last Friday (April 26), TSMC accounted for more than 30% of the market value of the Taiwan stock market, which has accumulated for 44 trading days, and the fastest it has reached 45 trading days today. Narrow-based indexes specify thresholds.
What are the implications of being included in a narrow-based index?
From April 2021 to October 2022, the Taiwan Stock Index was listed as a narrow-based index. During this period, the Taiwan Stock Index fell from 16,571 points to 12,856 points. This time it is once again facing the threat of being listed as a narrow-based index, and the market is in danger. enemy.
However, Chen Liqing, deputy general manager and spokesperson of the stock exchange, believes that the retracement of Taiwan stocks at that time was closely related to the epidemic, and global stock markets fell during that period. The high market value share of large companies is not a phenomenon unique to Taiwan’s capital market. TSMC currently accounts for about 32% of Taiwan’s share capital, while South Korea’s Samsung accounts for 33% of the market value of the Korean stock market, which is higher than TSMC.
Gao Jingping, deputy director of the Securities and Futures Bureau of the Financial Supervisory Commission, emphasized that reaching the narrow-based index threshold will not take effect immediately, and there will be a transition period.
According to statistics from the Financial Supervisory Commission, 90% of foreign traders in Taiwanese stocks are from Singapore, Hong Kong, the United Kingdom and other places, and traders in the United States account for only about 0.7%; and the impact of the narrow-based index is limited to futures, and does not include the spot market. , the assessment has limited impact on the overall Taiwan stock market.
Taiwan stocks frequently encounter narrow-based index risks. What countermeasures do the competent authorities take?
Chen Liqing said that after years of development, Taiwan’s semiconductor industry, led by TSMC, has the most complete upstream, midstream and downstream industrial chains, and related talents and advanced technologies are the strong backing of Taiwan’s capital market. But she also admitted that the concentration of industrial development is both an advantage and a risk.
According to stock exchange statistics, as of the end of 2023, electronics stocks accounted for 59% of Taiwan’s stocks, of which semiconductors accounted for approximately 39% of the market value. The stock exchange plans to leverage Taiwan’s global semiconductor industry’s key position to not only solidify the competitiveness of the electronics industry, but also to guide the more diversified development of Taiwan’s industry.
The stock exchange has recently proposed four major aspects: increasing industrial chain connections, guiding the development of diversified industries, strengthening domestic and foreign investment efficiency, and optimizing investor relations. It hopes to help the sound and balanced development of domestic capital market industries, thereby promoting the value of Taiwan’s capital market. Targeting the three new economic industries of green energy, digital and biotechnology, we hope to use the dual-engine power of the General Board and the Innovation Board to guide the development of the industry in a more diversified manner. The above three new economic industries currently only account for 1.4% of the market value of the Taiwan stock market. , the stock exchange has set a 10-year goal, hoping to increase its share to more than 10% by 2035. (Editors: Zhang Junmao, Pan Yijing) 1130429
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