When gauging a country's economic prospects, analysts first study the historical performance of its financial market and activity that characterize its investment environment. For more than 50 years, the Taiwan Stock Exchange (TWSE) has served as the island nation's definitive economic benchmark.
With strict attention paid to corporate governance reporting standards and strong economic upturn, Taiwan has a well-earned reputation as a preferred investment destination both at home and abroad. This is evidenced in the growth of TWSE's main index, which hit the 10,000 ceiling on May 11.
TWSE Chairman Jun-ji Shih knows what it takes not only to realize this record high but also to sustain that growth.
"One factor is economic performance, and we think that performance should be able to support the growth of the stock market. Other factors include the inflow of foreign funds and the contribution of individual domestic investors to enhance capital market surplus. The last decade has seen a steady climb in institutional investors, with this group having 40% of the overall holdings of the Taiwan market.”
At the end of June 2017, the TWSE reported 837 domestic listed companies and 64 foreign primary listed companies. Taiwan's well-known strength in high tech has also contributed to the stock market progress with globally-recognized giants Taiwan Semiconductor Manufacturing Company and Hon Hai Precision (Foxconn) being listed on TWSE. Biotech is also active, and the bourse has the highest number of listed biotech companies in Asia.
"Taiwan's position as a leading global supply chain gives our market many advantages with international linkage thro ugh Asia and worldwide. Our advanced ICT ecosystem enterprises are an integral part of our success. Investors in these companies enjoy the benefits of Taiwan's transparency and shareholder protection, while easily accessing other markets in the region and beyond,” noted Shih.
External recognition of Taiwan's advances in corporate governance by global reporting bodies shows yet another side of Taiwan's market strength. It is well worth mentioning that 2016 was the first year Taiwan made the Robeco SAM Country Sustainability Ranking. This is significant because when Taiwan was ranked, it was in the top third. Taiwan also placed first in APAC in Bloomberg's ESG category as well as rising to the 4th place position in ACGA's most recent survey.
"The ultimate goal of the TWSE is to provide trading value growth and consistently high dividend yields in the 4% range. Our listed companies also have reasonable P/E ratios; both of these are factors that continue to draw foreign investors to our market," Shih added.
Looking to the future, Shih is active in building greater collaboration with the international community to further strengthen Taiwan's investment environment. This involves working closely with other exchanges like Japan, Korea, Malaysia and NASDAQ with whom strong ties are held. Promoting the advantages of investing in Taiwan is also a key strategy, which entails roadshows in all regions of the world that include New York, London, Hong Kong and Singapore. With all this momentum in place, the TWSE is poised to deliver.