Taiwan's Largest ETF Prepares for Record Inflow Despite Ongoing Tensions

Taiwan's Largest Equity ETF Sees Record Inflows Amid Global Turmoil

NT$140 billion in net inflows have been recorded by the Yuanta/P-shares Taiwan Top 50 ETF in March, surpassing the previous all-time high of $2.9 billion in November. This surge in demand comes despite foreign investors being net sellers in the market this month.

Taiwan Semiconductor Manufacturing Co. (TSMC), the world's largest contract chipmaker, accounts for over 60% of the ETF's weighting and has seen its stock more than double over the past year, reaching an all-time high in late February. While TSMC's stock has fallen this month due to the global equity selloff, some money managers believe that Asia's high-end technology shares offer a hedge against the prospect of a prolonged war.

The inflows into the Yuanta/P-shares Taiwan Top 50 ETF demonstrate the resilience of domestic demand, even in times of global turmoil. Notably, money has flowed into the ETF despite the Taiex index falling nearly 6% in March. In contrast, global funds have sold $23.1 billion of local shares so far this month.

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Industry analysts are optimistic that the trend of inflows will continue, driven by bargain hunting amid volatility. Rebecca Sin, an analyst at Bloomberg Intelligence, notes that investors are focusing on tech names such as semiconductors and AI.

The Taiwan ETF industry, valued at $260 billion, is dominated by local firms. However, global asset managers are increasing their presence to tap into the rising demand. JPMorgan Asset Management recently launched its first Taiwan-focused wealth management product in over a decade.

Industry Insights

• Asia's high-end technology shares are seen as a hedge against a prolonged war.
• Passive large-cap equity ETFs continue to capture inflows into mega-cap semiconductor names.
• The trend of inflows is expected to continue, driven by bargain hunting amid volatility.

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