Taiwan ETF Could Surge As Tech Sector Opens Doors | ETF Trends

Things are looking up for Taiwan’s exchange traded fund (ETF): the country’s exports are improving and economic growth is rising. Now, things may get even better.

Taiwan will soon open its technology sector to Chinese investors, allowing investments of up to 10% in Taiwanese tech companies and up to 50% in new tech-sector joint ventures, reports Robin Kwon for The Financial Times. The new rules will enable Taiwanese companies to forge strategic alliances with customers or suppliers in China, which makes up a large proportion of Taiwan’s export market. [Taiwan ETF Goes On a Roll.]

It could be a boon for iShares MSCI Taiwan (NYSEArca: EWT), as well, since almost 60% of the ETF goes to Taiwan’s tech sector.

Other good things happening in Taiwan these days include:

  • Putting an end to a 13 month decline, Taiwan’s annualized six-month rate of change for the composite leading indicator inched 0.2% in January over December, writes Audrey Wang for Taiwan Today. The change in the rate of change signals a healthy short-term economic business cycle, with further growth in the following months. Finance, wholesale, retail and food service revenues showed improvements.
  • The Directorate-General of Budget, Accounting and Statistics recently revised upward the fourth quarter annual economic growth rate to 6.92% from 6.48% after Taiwan’s economy expanded faster-than-expected in the last quarter of 2010 on higher exports, according to RTT News. Export sales jumped 14.90% in the fourth quarter year-over-year and 20.45% in the third quarter.
  • Taiwan’s real GDP grew 10.82% for 2010, up from an initial estimation of 10.47%. The government projects an economic expansion of 4.92% for 2011 as private consumption and exports will maintain economic growth this year.

Consumer confidence, however, has been flat, with Taiwan’s Consumer Confidence Index dropping 0.89 points in January, according to Focus Taiwan. The sub-index on confidence in stock market investments dropped the most as local stock investors grew less confident after outflows of foreign capital pulled the stock market back. Confidence in the domestic consumer prices dropped and confidence in the local economy over the next half-year slightly dipped. The sub-index on durable goods purchases posted the highest gains and confidence in the job market also slightly rose.

For more information on Taiwan, visit our Taiwan category.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.