Industry Updates

Taiwan ETF sees outflows as stock market suffers record losses

The Taiex dipped 10.9% between 10 May and 17 May

Jamie Gordon

a city skyline at night

More than a third of the assets managed by the DWS Taiwan ETF exited after the Taiwan Stock Exchange (Taiex) recorded its biggest intraday drop since launch in 1969. 

According to data from Ultumus, the Xtrackers MSCI Taiwan UCITS ETF (XMTW) saw $108m outflows in the week ending 21 May.

This followed a 10.9% dip in the Taiex between 10 May and 17 May, which included an 8.6% fall on 12 May alone – equivalent to a net loss of $74bn, according to data from the Taiwan Stock Exchange.

These downturns followed a sudden rise in coronavirus cases, which rose from zero to 400 in the first three weeks of May.

Though these numbers seem comparatively small, they are a steep increase on its case count of 27 in May 2020 and their distribution throughout the island has concerned Taiwan officials. 

Responding to the cases, the country is now on alert level three, making mask-wearing in public spaces mandatory and limiting indoor social gatherings to five people.

Though short of full national lockdown, fears are circulating about the possibility of level four restrictions being implemented and this has weighed on the performance of Taiwanese equities. For this situation to come about, the country would need to have 14 consecutive days with more than 100 cases, with more than half being of unknown origin.

On Monday, Taiwan criticised the World Health Organisation (WHO) for conceding to pressure from the Chinese government, as the island was refused admission to a meeting of the WHO’s decision-making body.  

XMTW’s returns are also being hampered by the performance of Taiwan Semiconductor (TSMC), which has a 27.8% weighting in the ETF’s basket.

Investors buzz over semiconductor ETF amid supply scarcity

Taiwan’s largest and most influential company, TSMC has seen its share price fall 15.8% since January 21, following a 141.5% rally in the 11 months to 19 February.

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