With the technology sector rallying, tech-heavy Taiwan country-specific exchange traded funds are pulling ahead as the benchmark Taiex index ended one of its best weeks this year.
After Nasdaq broke through its dot.com record, the tech-heavy Taiex hit its highest close in 15 years, reports Kyoungwha Kim for Bloomberg.
Chipmaker Taiwan Semiconductor Manufacturing Company (NYSE: TSM) was among the leaders among industry groups.
Over the past week, the iShares MSCI Taiwan ETF (NYSEArca: EWT) gained 4.1% and First Trust Taiwan AlphaDEX (NYSEArca: FTW) rose 5.5%. FTW was trading at an all-time high while EWT was moving toward pre-financial-crisis highs.
EWT includes a hefty 57.6% tilt toward the information technology sector and FTW includes a robust 59.4% tech position. EWT also includes a large 22.6% position in Taiwan Semiconductor Manufacturing while FTW has a smaller 2.4% weight toward the chipmaker. [ETF Plays to Capture Growth in Emerging Asia]
The Taiwanese market was also attracting greater foreign investments, with foreign investors funneling 46.5 billion New Taiwan dollars or $1.5 billion, on Friday, the third-largest single day of net buying on record, reports Chao Deng for the Wall Street Journal.
ETF investors have also taken a shine toward Taiwan country-specific ETFs. EWT has attracted $671.4 million in net inflows year-to-date, according to ETF.com. EWT now has $4.1 billion in assets under management.
Taiwanese stocks spiked toward the end of the week on hopes of a potential stock-trading link between Taiwan and Shanghai pushed shares higher – a similar program between Shanghai and Hong Kong has helped support a rally in both markets.
Taiwanese authorities also recently introduced limits on foreign investments in the corporate debt market in an attempt to diminish inflows that strengthened the local currency.
“There is some speculation that foreign investors will move cash to the equity market from the debt market,” Andrew Tsai, an economist at KGI Securities Co., said in the Bloomberg article. “The rally is supported by speculation of a Shanghai-Taiwan stock connect and fund inflows betting on the Taiwanese dollar’s appreciation.”
iShares MSCI Taiwan ETF
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Max Chen contributed to this article.