Uncovering Asian stock markets: The TAIEX

Julie Brownlee, Fsp Invest, 21 Apr. 2015

Tags: taiex, stock market, taiwan stock exchange, technology, technology stocks, emerging market, cyclical market,

Looked at gross domestic product (GDP), Taiwan is the 19th largest economy in the world.

Its economy has seen terrific growth over the last few decades. Pushing this is the country’s specialisation in technology.

You can see this from looking at its main stock market index, the TAIEX.

Let’s take a closer look…

Taiwan’s main stock market index

Just like South Africa, Taiwan is an emerging market. And like most emerging markets, Taiwan is highly exposed to the goings on in its local economy and the global economy.

The stock market in Taiwan is the Taiwan Stock Exchange. It began operating in 1962 and has over 800 companies listed on it.

Its main benchmark index is the TAIEX (or Taiwan Capitalisation Weighted Stock Index). Of the companies included in the index, 86% of them are cyclical.

In many emerging markets, it’s financials or commodities (like in South Africa) that dominate the benchmark indices. But in Taiwan, it’s technology.

You just have to think about the high number of technology products you own that are made in Taiwan.

Technology is the dominant sector

Have a look at the chart below. This shows the breakdown of the sectors making up the TAIEX…

Chart showing sectors of TAIEX

Technology stocks make up over a third of the market, as you can see from the chart above. And the biggest subsector of the technology sector is semiconductors.

The industrials sector accounts for 19.11% and the financial sector makes up 15.20%.

The largest defensive sector is consumer goods. This is mostly food and drink companies, and personal and household goods producers. Together they account for 8% of the market.

The rest of the consumer goods sector contains car and car part makers, which are cyclical in nature.

The smallest sectors are basic materials at 9.38% and telecoms at 5.13%.

So there you have it, the TAIEX.

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