EWT Stock Recent News

Why China May Need To Do More To Boost Investor Confidence

This Saturday, Taiwan will head to the polls, in elections that will be closely watched by investors, due to the self-governing territory's outsized role in the global economy as the biggest semiconductor manufacturer in the world.

Global equities, including US small and mid-cap stocks, have participated in the 2023 rally. The iShares MSCI Taiwan ETF is an outperforming EM country fund with a reasonable valuation and improved momentum. EWT has a high share price and a trailing 12-month dividend yield of 15.1%, but dividends are expected to normalize at a lower rate.

Following a dismal 2022, Taiwanese equities are set to end the year higher. Looking ahead, the fundamental and technical setup is as compelling as ever ahead of election season. EWT isn't cheap, but its valuation is well-supported by an attractive growth/income combination.

iShares MSCI Taiwan ETF has delivered double-digit returns in a year where Asian emerging market stocks have performed poorly. External trade which accounts for 118% of GDP has been impacted by weak export conditions for a year, although things could pick up in Q4. The government intends to step up support for domestic players in the IC chain, but uncertainties surrounding biggie Taiwan Semiconductor's outlook could leave an adverse mark.

Revived orders for Taiwan's coveted semiconductor chips and higher consumer spending will help its economy.

Taiwan is going through headwinds in 2023 as concerns about geopolitics and semiconductor demand. Its economy contracted by 3.02% YoY in the first quarter after falling by 0.4% in Q4 of last year.

Taiwan ETFs are big beneficiaries of the AI boom and the semiconductor rally.

Taiwanese stocks have come back into favor, rising strongly YTD. While the AI tailwind is significant, the geopolitical and cyclical risks are hard to ignore. Having already re-rated this year, the iShares MSCI Taiwan ETF offers limited value from here.

iShares MSCI Taiwan ETF offers investors exposure to Taiwanese equities, with a heavy focus on Taiwan Semiconductor Manufacturing Co Ltd. Despite political headwinds, EWT provides good value with a net IRR estimate of over 10% per annum for the next five years. However, investors should be cautious of the unpredictable risk of increased tensions between China and Taiwan, as seen with the Russo-Ukrainian War and its impact on the Russian equity market.