Taiwan’s Weighted Index climbed up to 2% in morning trading after its weighting of the MSCI Emerging Markets Index outpaced China for the first time in nearly two decades. This shift reflects significant investor interest in Taiwan’s artificial intelligence sector and positions the market as the top component in a widely followed emerging market benchmark.
The latest figures show Taiwan holding a 21.06% allocation in the MSCI EM index, marginally higher than China’s 20.93% as of the end of last month. Data compiled by Bloomberg indicates that this is Taiwan’s first overtaking of China in the index since July 2007.
Taiwan’s increased profile in the index underscores ongoing demand for AI-related shares, emphasizing the prominence of local technology companies, especially within the semiconductor industry. Unlike China, which is currently experiencing weaker consumer spending, Taiwan continues to benefit from its critical role in global chip manufacturing. Taiwan Semiconductor Manufacturing Co., now the largest constituent of the EM benchmark, has risen approximately 13% this year.
Comparative index performance highlights Taiwan’s momentum, with MSCI Taiwan gaining over 11% in January, while the MSCI China index advanced by 5% during the same month. Looking forward, analysts estimate earnings for the MSCI Taiwan index will grow by 37% over the next year, outpacing the 15% forecast for the Chinese benchmark, even though Chinese equities trade at lower earnings-based valuations.
Strategists at Citigroup Inc upgraded their stance on Taiwan stocks from neutral to overweight in December, noting the sector’s integration into the global AI supply chain and its strong earnings potential.
