Corporate governance index outperforms broader main board


TAIPEI, Taiwan — The TWSE Corporate Governance 100 Index (TWSE CG100 Index) outperformed the broader market on the Taiwan Stock Exchange (TWSE) over the past year, indicating that the index served as an ideal indicator for investors to follow, according to the Taiwan Index Plus Corp. (TIP).

The TIP, which is a wholly owned subsidiary of the TWSE, said that in the past 12 months and six months, the TWSE CG100 index rose 18.39 percent and 5.63 percent, respectively, beating the 15.99 percent gains and the 4.96 percent, respectively, posted by the Taiwan Stock Exchange Capitalization Weighted Stock Index on the main board. The TWSE operates the local main board.

In 2016, the TIP said, the TWSE CG100 index repeatedly hit record highs, a performance that has attracted much market attention.

The TWSE CG100 index, launched in June 2015, comprises 100 stocks listed on the main board whose scores are among the top 20 percent of entities under the Corporate Governance Evaluation System of the TWSE in the previous year.

The TIP said that many investors have rated the index highly as they perceive corporate governance as one of the important factors to be considered for them to invest in.

The index provider said that the solid gains posted by the TWSE CG100 Index shows that efforts by the Financial Supervisory Commission, the top financial regulator in Taiwan, to push for corporate governance have paid off.

In addition to good corporate governance records, the TWSE CG100 Index has two additional criteria: liquidity and financial health, which take into account a company’s book value, net profits and revenue growth, according to the TIP.

Meanwhile, the TWSE RAFIR Taiwan High Compensation 100 Index (Taiwan HC100 index), which was jointly launched by the TWSE and the U.S.-based investment management firm Research Affiliates LLC in August 2014, is also perceived as one of the best indexes for investors to track, the TIP said.

The TIP said that the Taiwan HC100 index posted 18.50 percent and 6.97 percent in gains in the past 12 months and six months, respectively, also outperforming the broader market.

Last year, the Taiwan HC100 index was the best performer among the indexes launched by the TWSE, the TIP said.

The Taiwan HC100 index’s constituents were selected and weighted based on their compensation for employees, which shows how employers take care of their employees to fulfill social responsibility, the TIP said, adding that the index has a low replacement rate in constituents after index reviews.

The Bureau of Labor Funds, which is charge of managing various labor funds, including the Labor Pension Fund and the Labor Retirement Fund, has entrusted securities investment trust firms to manage its funds by using the Taiwan HC100 index as an underlying index.