Taiwan markets closed Tues for holiday. But the MSCI expectations are high - perfect setup to not meet expectations for a rebound, imo. At least initially, anyway. Look for a capitulation move next week or maybe as early as late this week. I'm sniffing at ASX and TSN and EWT for long term plays.
REUTERS Taiwan stocks rebound after MSCI weighting hike [DKLQGJK]
(Updates indices, adds comment)
TAIPEI, June 21 (Reuters) - Taiwan stocks edged higher in
early trade on Monday as MSCI's announcement it would raise the
Taipei market's weighting in its emerging markets index triggered
buying across the board.
Around 40 minutes into trade, the TAIEX share index <.TWII>
was up 0.70 percent at 5,608.19 points, recouping some of the
1.68 percent it lost on Friday. The index fell 2.9 percent last
week.
"It's knee-jerking to MSCI's move but some people still used
early rises to sell on concerns over volatile U.S. stocks," said
Richard Tsai, senior vice president at Grand Cathay Securities.
U.S. stocks finished mixed on Friday as investors closely
watched a Federal Reserve meeting at month's end.
Shares in Taiwan Semiconductor Manufacturing Co (TSMC)
<2330.TW> rose 1.87 percent to T$43.60 and those of United
Microelectronics Corp (UMC) <2303.TW> jumped 2.18 percent to
T$23.40, helping the tech sector <.TELI> 0.7 percent higher.
The world's two largest contract chipmakers are foreign fund
darlings, making up some 14 percent of total market
capitalisation.
Morgan Stanley Capital International (MSCI) said Taiwan
stocks would first be weighted at 75 percent capitalisation
beginning November 30, up from the current 55 percent in a
widely-expected move to reflect the island's deregulation of
foreign investment rules.
The move to full inclusion before June next year, making
Taiwan the heavily weighted market in the Emerging Markets Index,
was more than investors had anticipated, which analysts said
would prompt global fund managers to buy more local shares.
On a sour note, investors continued to sell display screen
maker AU Optronics <2409.TW> following its disappointing overseas
share offer last Friday.
AU shares dropped 1.96 percent to T$50.00 partly on growing
concerns that demand for flat-screen monitors will slow in the
second half of the year, hurting screen prices.
Smaller rival Chi Mei <3009.TW> lost 3.64 percent to T$53.00.
(US$1=T$33.8)
((Reporting by Baker Li, editing by Alice Hung; Reuters
Messaging: baker.li.reuters.com@reuters.net; +886 2 2508-0815))
