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Can anything go wrong for the Taiwan exchange traded fund? Not lately. Although iShares MSCI Taiwan (NYSEARCA:EWT) was dragged down in Friday’s market moves, it’s showing some nice upside moves.

Pulling back the curtain, we see a few things driving the growth:

  • The country boasts record-high export rates.
  • The main stock index, the Taiex, is back to where it was prior to the financial crisis.
  • Consumer demand has recovered, with the consumer confidence index at a 10-year high, reports Robin Kwong for The Financial Times.
  • Jacqueline Tse, strategist at HSBC, believes that Taiwan will see a bullish 2011 that has yet to be reflect in current stock prices. Additionally, years preceding presidential elections, like this year, have historically been good years for the market, adds Tse.
  • The Taiwan Institute of Economic Research (TIER) revised upward its economic growth projection to 5.71% for 2011, compared to its previous 4.12% growth forecast, on a better outlook for exports and tourism, reports Philip Liu for The Taiwan Economic News.

The Council for Economic Planning and Development (CEPD) stated that the indicators for financial, production, trade and consumption suggest continued growth, according to Focus Taiwan. Hung Zui-pin, director-general of the CEPD’s Department of Economic Research, commented that the government has been bringing in more foreign and domestic investment to stimulate growth.

EWT is most dependent on Taiwan’s technology sector, which accounts for 56% of the ETF.


(Click to enlarge)

Max Chen contributed to this article.

Source: Taiwan ETF Goes on a Roll