What is the Taiwan Stock Exchange Corporation (TSEC) Weighted Index?

Taiwan Stock Exchange Corporation (TSEC) Weighted Index is defined as a stock market index made up of companies that are traded on the Taiwan Stock Exchange (TWSE). Established in 1961, the TWSE is a securities trading institution based in Taipei.

Calculating the Taiwan Stock Exchange Corporation (TSEC) Weighted Index

The stock market index is a weighted average, which means stocks with higher market capitalisation have greater influence on the overall stock market index. The TSEC has a base value of 100, on the basis of its 1966 level. The TSEC weighted index, also known as the TAIEX, offers a gauge of overall market performance.

In a price-weighted index such as the TSEC Weighted Index, higher-priced stocks exert a greater influence on the index’s overall performance. For example, a stock that moves from $120 to $130 will have the same impact on the stock market index as a stock whose price moves from $20 to $30, despite the fact that the percentage change from $120 to $130 is 8.3% and that of the latter is 50%.

This is why the price-weighted index can be used to understand the direction of the average stock price of any given market or industry.

In order to find out the value of a simple price-weighted index, the sum of the share prices of the individual firms must be divided by the number of companies. In the event of a stock split or change in the number of firms listed on the stock market index, the divisor will be adjusted to ensure continuity.

Components of the TSEC Weighted Index

As of 16 February 2021, a total of 753 companies were listed on the TSEC Weighted Index. The companies belong to a diverse range of industries such as semiconductor, textiles, shipping and transportation, tourism, agriculture technology, biotechnology and medical care, building material and construction, electronic parts and components, eCommerce, electric machinery, communications and internet, and computer and peripheral equipment, among others.

Some of the companies listed on the TSEC Weighted Index are Dacome, Data Vision, HJC, High-Tek and Syn-Tech.

Taiwan has an emerging market economy, which is the economy of a developing country. Therefore, Taiwan’s economy has some characteristics of a developed market, but not all. It also means that the country’s economy is becoming more and more entangled with the global economy, as it becomes more engaged with markets around the world. Some of the other emerging markets are India, Russia, China, Mexico and Brazil.