Broad Market Plunges as Electronics Lead Declines While Financials Show Resilience
Taiwan stocks have seen intensified volatility recently, with selling pressure re-emerging intraday on October 30. As of 12:00 noon, the TAIEX plunged 1161.02 points, or 2.5%, to 45207.31. Popular market-cap ETFs Yuanta Taiwan 50 (0050) and KGI Taiwan TOP50 (009816) fell 2.8% and 2.75% intraday respectively, while leveraged 2x ETFs generally fell more than 5.5%. By sector, the electronics subindex dropped about 3%, the non-electronics index fell only 1.7%, and the financial index fell only about 1.3%, clearly less than the broader market, with financial and traditional-industry groups showing relatively resilient downside resistance.
High-Financial-Weight ETFs Relatively Resilient Intraday
The importance of asset allocation lies in pursuing returns in bull markets, as well as diversifying risk and reducing portfolio volatility during turbulence. Among Taiwan ETFs with higher financial holdings, the purest financial play, Yuanta MSCI Financial (0055), fell only 1.84% intraday on the 30th, and has gained 24.7% cumulatively over the past 3 months. Although the financial industry features high regulation and relatively high industry barriers, it still faces risks from interest-rate changes, business cycles, and market volatility. For investors focused on the defensive performance of financial stocks but unwilling to bet solely on financials, some market-cap, multifactor, and high-dividend ETFs also offer a certain allocation to financials.
18 ETFs With Financial Weightings Over 20%, 6 Over 50%
A review of Taiwan ETFs with financial holdings above 20% shows 18 names, of which 6 have financial weightings above 50%. In addition to 0055 at 96%, multifactor-type KGI Selected 30 (00938) and high-dividend-type Uni-President Taiwan High Dividend Momentum (00939) reached 62.61% and 59.94% respectively, while Cathay Dividend Select 30 (00701) and Capital Taiwan Select High Dividend (00919) both exceeded 54%. Some million-investor popular high-dividend ETFs also have sizable financial allocations, including 00919 at 54.09%, Cathay Sustainable High Dividend (00878) at 35.05%, and Yuanta High Dividend (0056) at 28.48%, reflecting differences in stock-selection logic and sector allocation.
Several Funds Up Nearly 20% Over Past Three Months as Returns Diverge
Over the past 3 months, several ETFs with higher financial weightings have posted double-digit gains. Among them, 0055 rose 24.7% cumulatively, while 00701 and 00939 rose 20.51% and 20.5% respectively, both up more than 20%. In addition, Fuh Hwa FTSE High Dividend Low Volatility (00731) and 00919, both with financial weightings above 50%, rose 19.66% and 19.35% respectively over the past 3 months, while 00938 gained 18.93%, showing solid overall performance. However, short-term downside resistance and medium-term returns are different aspects, and actual performance is affected not only by financial allocation but also by other holdings and overall market conditions, so investors should still be mindful of volatility risk.