A Taiwan country-specific exchange traded fund surged Tuesday, with Taiwanese equities enjoying their best day since March last year, as a rebound in technology stocks helped lift the island country’s market.

Among the top performing non-leveraged ETFs of Tuesday, the iShares MSCI Taiwan ETF (EWT) increased 5.5%, paring back some of its recent losses. EWT had declined 9.8% over the past week.

The iShares MSCI Taiwan ETF includes a hefty 58.8% tilt toward the technology sector, with a large 19.6% position in Taiwan Semiconductor Manufacturing.

Taiwanese markets bounced back after retreating Monday in response to the government’s decision to enact shutdown measures to restrict its worst outbreak of the Covid-19 pandemic. Taiwan’s Taiex benchmark has pulled back nearly 10% since the end of April after a surge in untraceable Covid-19 cases fueled concerns over the strength of the island’s economic recovery, Bloomberg reports.

Morgan Stanley also downgraded Taiwanese stocks to underweight, pointing to their elevated valuations compared to other markets and high correlation to the Nasdaq.

Taiwan’s tech segment has also fallen victim to the global concerns over higher inflation and stretched valuations.

Nevertheless, foreign investors took advantage of the previous session’s dip to rush back into Taiwanese stocks, The Economic Times reports.

“However, the key indicator going forward will still be on how the pandemic develops,” Capital Futures Corp analyst Yeason Jung told The Economic Times.

Capital Economics argued that “Taiwan has plenty of fiscal firepower” and expects support measures to be announced soon as the country faces a surge in infection rates. Taiwan’s Deputy Finance Minister Juan Ching-Hwa told Bloomberg News Tuesday that the Taiwan Financial Stabilization Fund will be monitoring the market and support it if necessary.

EWT YTD Performance

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