Lifting the Weighting Cap on ETFs: A Shift for Taiwan's Market
Taiwan's financial regulator is considering lifting a cap that limits the market capitalization of local exchange-traded funds (ETFs) that track indexes, with TSMC's surge being a significant factor in this decision. The current 30% limit has made it difficult for adjustment in ETF products tracking the Taiex index, as TSMC's shares have gained around 140% since the global artificial intelligence investing frenzy started late 2022. This move aims to restore flexibility and competitiveness in Taiwan's ETF market.
- Lifting the weighting cap could lead to increased investor confidence in the Taiwanese market, as it would allow for more representative tracking of local indexes.
- How will this change impact the dynamics of investment strategies in Taiwan, particularly among foreign investors and institutional investors?