Intraday Plunge of 3737 Points, ETF Popularity Climbs Against the Trend
Taiwan stocks saw sharp volatility last week, plunging 3737 points intraday last Friday to set a record for the largest intraday drop. According to shareholding distribution data from the Taiwan Depository & Clearing Corporation, as of last Friday, total ETF beneficiaries reached 24,637,123, an increase of about 496,000 from the previous week, showing a divergence of falling stocks and rising ETF popularity. Panic sentiment did not stop the investment boom, instead attracting many investors to enter the market and seize rebound opportunities through index-tracking products.
0050 Leads With Increase of 132,400, Top Ten Revealed
A closer look at the top ten Taiwan stock ETFs by weekly increase in beneficiaries shows Yuanta Taiwan Top 50 (0050) added about 132,400 beneficiaries in a single week, bringing total beneficiaries to about 3,874,000, making it the weekly popularity growth champion. Next was Actively Managed CTBC Taiwan Income (00406A), up about 92,000 on the week, with total beneficiaries climbing to 540,0007631. Cathay Sustainable High Dividend (00878) ranked third with a weekly increase of 36,700, bringing total beneficiaries to 1,748,220.
Fourth to tenth were Yuanta Taiwan Top 50 Bull 2X (00631L), Actively Managed Uni-President Taiwan Stock Growth (00981A), Yuanta High Dividend (0056), Capital Taiwan Weighted Bull 2X (00685L), Fubon Taiwan 50 (006208), KGI Taiwan TOP50 (009816) and Capital Taiwan Select High Dividend (00919), adding about 35,000, 32,100, 23,600, 23,000, 15,200, 14,800 and 10,400 respectively in a single week. Total beneficiaries of 00631L climbed to about 390,000, showing that even as market volatility intensified, investors remained willing to use leveraged products to participate in the market.
Subscriptions Heat Up on Plunge Day, Leverage Decay Risk to Watch
On the day of the sharp drop last Friday, 0050 and 00631L saw turnover exceed 78.4 billion and 34.0 billion respectively, with net subscriptions reaching 48.31 billion and 16.6 billion, both showing active bargain-hunting inflows. 0050, focused on large-cap heavyweights, and 00631L, which seeks 2x the daily return of the Taiwan 50 Index, drew attention at the same time, reflecting that some funds are bullish on a rebound in large-cap heavyweights after the sharp drop.
However, leveraged ETFs rebalance exposure daily and pursue a multiple of single-day returns, not a fixed multiple of long-term cumulative returns. Especially when the market swings violently and the index rises and falls repeatedly, compounding effects can cause volatility decay, and leveraged ETFs may still post losses even if the index eventually returns to its starting point. In terms of performance, as of last Friday, 00631L is up 59.1% year-to-date, 0056 is up 50.4%, and 0050 is up 43%. Legal persons noted that after a sharp drop, funds may flow back first to large-cap heavyweights with solid profit bases and good liquidity, but an increase in beneficiaries does not mean the market has bottomed, and foreign investor moves, corporate earnings and changes in international markets still need to be watched.