Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Alliance Semiconductor -- Ignore unavailable to you. Want to Upgrade?

To: DJBEINO who wrote (9327)	5/15/2001 11:16:51 AM
From: DJBEINO	Respond to of 9582

Taiwan seen an Asian winner in new MSCI indices TAIPEI, May 15 (Reuters) - Taiwan's stock market is expected to benefit when MSCI unveils a new standard for inclusion in its indices this weekend, but weightings for some large-cap stocks could be cut in favour of smaller more easily traded companies. On Saturday, index compiler Morgan Stanley Capital International (MSCI) will reveal constituents of its Provisional Index series, which adopts a "free-float" methodology emphasising companies whose shares are available for trading, rather than those that are closely held. Asian markets dominated by state firms, family-owned enterprises and tightly-held members of corporate conglomerates are expected to decrease in weighting compared to counterparts in Europe or North America. But Taiwan, where individual investors held 55.37 percent of all shares last year, is seen claiming ground from most other Asian markets in the MSCI indices, which are used as a benchmark by fund managers for billions of dollars in investment funds. "The general thinking is that Taiwan's weighting in the world index declines negligibly, and its weighting in the regional and emerging markets indices increases," said Neal Stovicek, head of Research at National Securities based in Taiwan. "Taiwan is seen as a winner," he said. Credit Suisse First Boston estimated that Taiwan's inclusion weight in MSCI's Far East ex-Japan would rise to 22.3 percent from 19.3 percent. Other estimates go to as high as 30 percent. WINNERS AND LOSERS Analysts say the new Taiwan Index is expected to introduce as many as 12 new companies into its roster and drop several firms, as well as shake up weightings of existing MSCI index constituents. Taiwan Semiconductor Manufacturing Co (TSMC) <2330.TW> <TSM.N>, Taiwan's heaviest heavyweight commands just over 10 percent of total market capitalisation and could slip to 20 percent weighting from its current 21 percent, according to Salomon Smith Barney estimates. TSMC is 12 percent owned by a Taiwan government investment fund and 30 percent by Philips Electronics <PHG.AS>. By contrast, TSMC's archrival in the contract chipmaking business, United Microelectronics <2303.TW> <UMC.N>, is expected to rise by two percentage points to 13.6 percent weighting. UMC is the market's third largest company in terms of capitalisation with just under 10 percent of total market capitalisation. While Chunghwa Telecom <2412.TW> is expected to debut on the provisional index, its weighting was seen at just 0.5 percent despite holding the second-largest market capitalisation behind TSMC. That's because the state-controlled company sold only three percent of its shares in an disappointing domestic stock offering. The government still owns the remaining 97 percent of the telecom giant. "Free float is very much going to work against it," said Jeffrey Hanson, head of research at CSFB. "I still think it's going to be included, but probably at a very low weighting." Microchip designer VIA Technologies <2388.TW> is also widely expected to make the new list. The company is Taiwan's tenth largest big-cap, but not represented on the existing MSCI index. The new index aims to expand coverage to 85 percent of the target market's total capitalisation instead of the current 60 percent. "INVESTABILITY" IN FOCUS MSCI is giving fund managers ample time to digest the new methodology, which will be phased into its standard indices in two steps starting in November this year and ending in May 2002. The new list of stocks to be announced on Saturday will also include an "investability factor" for Taiwan, which will take goverment capital controls into account. Taiwan is currently weighted at just 80 percent of its market capitalisation in MSCI indices due to investment restrictions, such as the lengthy approval process for qualified foreign institutional investors. MSCI is also scheduled to announce its quarterly rebalancing of its standard index on May 17.