Taipei, May 18, 2011 (CENS)--In its semi-annual adjustment, Morgan Stanley Capital International (MSCI) downgraded yesterday (May 17) the weighting of Taiwanese stocks in EMF (emerging market free) index and Asia ex-JP index by 0.1 and 0.2 of a percentage point, respectively, to 11.7% and 19.7%.

Analysts estimated that the surprising move may induce NT$4-5 billion of foreign funds to retreat from the local bourse.

During the adjustment, the weighting of mainland Chinese and Indian stocks in EMF rose further, dampening the weighting of Taiwan and South Korea, although the weighting of Indonesia, the Philippines, and Thailand remained unchanged. After the adjustment, Taiwan still ranked third place in EMF, trailing China and South Korea.

Shih Lung-chih, a local fund manager, remarked that the effect of the adjustment will be limited, as evidenced by the modest decline of 27 points of Taiex Index yesterday.

PixArt Technologies and Mitac International were removed from the list of constituent stocks of MSCI global index and transferred to small- and mid-cap index. As a result, share price of PixArt dropped by the daily limit of 7% in mid-session yesterday, while that of Mitac also plunged 4%.

Fifteen Taiwanese stocks were added to the list of constituent stocks of MSCI small- and mid-cap index, including seven listed on the emerging enterprise market, and eight Taiwanese constituent stocks, mostly IC design houses, were removed from the list. The new constituent stocks are mostly in the fields of optics, LED, semiconductor, and smart phone.

Weightings of Hon Hai, Fubon Financial Holding, and ASE Inc. in MSCI global index were downgraded at moderate scale.

The adjustment will take effect after the closing of the Taiwanese stock market on May 31.


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