MSCI’s weighting move to keep capital rolling in local stock market


TAIPEI, Taiwan, The China Post Staff

The Taiwan stock market yesterday dropped 8.77 points to close at 5,788.94 points while daily turnover shrank to NT$66 billion. Though, some securities analysts are still optimistic over the market’s prospects, saying that the move for the Morgan Stanley Capital International (MSCI) to raise the Taiwan market’s weighting in November would help boost capital momentum on the market.

MSCI, which compiles indices tracked by fund managers, proposed removing the index weighting caps called limited inevitability factor (LIF) on Taiwan, in a two-phrase approach. It will first raise the LIF from current 0.55 to 0.75 in November and finally lift it to the full number on May 30, 2005. The move will advance Taiwan to top all other emerging markets around the world.

The MSCI proposed the move following an announcement by the Securities and Futures Commission (SFC) last year easing restrictions on foreign buying of Taiwan shares.

The MSCI market indices are commonly referred to by fund managers as a key benchmark in adjusting the percentages of different markets in their investment portfolios.