iShares MSCI Taiwan ETF
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Cullen Capital Management LLC grew its stake in iShares MSCI Taiwan ETF (NYSEARCA:EWT) by 24.6% in the undefined quarter, according to the company in its most recent filing with the Securities and Exchange Commission. The institutional investor owned 156,851 shares of the exchange traded fund's stock after buying an additional 31,016 shares
Franklin Resources Inc. lessened its position in shares of iShares MSCI Taiwan ETF (NYSEARCA:EWT) by 66.0% in the second quarter, according to its most recent disclosure with the Securities and Exchange Commission. The fund owned 43,443 shares of the exchange traded fund's stock after selling 84,155 shares during the period. Franklin Resources
Global market leadership may be shifting again as trade tensions escalate, the U.S. dollar trades at multi-year lows, and gold at all-time highs. This brings back for the second time this year the quest for the best international ETFs. The most recent global outlook from the IMF points to ongoing strengths in emerging markets and developing economies vs. the U.S. and other advanced economies in 2026.
EWT which covers 100 Taiwanese stocks, most of which are giant and large-caps is up by 25% YTD and outperforming global markets but underperforming emerging markets. EWT's performance is closely tied to TSMC, whose recent rally appears sentiment-driven as future growth and margins are expected to moderate. Taiwan's robust GDP and export growth backdrop support EWT, but semiconductor exports which have not been subject to a tariff rate, could face this risk going forward.
EWT offers exposure to Taiwan's large- and mid-cap stocks, with a heavy tilt toward tech (66% of holdings), especially Taiwan Semiconductor, which alone makes up ~24% of the ETF. The expense ratio is relatively high at 0.59%, especially compared to the Franklin FTSE Taiwan ETF at 0.19%. At a P/E around 21x, the risk-reward balance doesn't seem compelling, as the country faces geopolitical risks.
EWT remains a buy due to strong momentum, attractive valuation, and a technical breakout above key resistance. The ETF's performance is heavily tied to Taiwan Semiconductor, which now makes up over 24% of the fund and benefits from the AI rally. EWT offers a high dividend yield, growing assets, and robust liquidity, but investors should note its elevated risk and sector concentration.
Topping the list and outperforming in that span have been emerging market countries like Brazil and India, which are both up well over 6.5%. International ETFs don't only have momentum on their side, but they also offer higher yields than the US at the current moment. Across all 22 ETFs, the average yield stands at 3.25%.
Taiwan's economy has recovered from a brief recession in early 2023 but faces new challenges due to semiconductor industry volatility. Quarterly GDP growth dipped to 1.8% last quarter, indicating slower economic momentum. Trade war tensions are contributing to economic uncertainties and could impact future growth prospects.
iShares MSCI Taiwan ETF has outperformed its peers with an 18.2% return in 2024, driven by strong performance from TSMC. Taiwan's macroeconomic environment remains robust, with GDP growth expected to surpass IMF forecasts, bolstered by domestic spending and a recovering manufacturing sector. With a 23% stake, the prospects of TSM weigh heavily on EWT's prospects; fortunately, the outlook looks bright.
Shanghai CSI 300 has gone from a 52-week low to a 52-week high in only a couple of weeks. Other than China and Hong Kong, Australia is the only other international market starting the week at a 52-week high.
A surge in exports and a slowdown of imports led to a record high trade surplus of USD$11.5bn last month. The stronger-than-anticipated trade surplus should offer some support to Taiwan's third-quarter GDP.
Chinese companies are being encouraged to return cash to shareholders - and are finding good reasons to do so. Regulators are encouraging companies to focus on shareholder returns, and changing macroeconomic conditions are making it easier for Chinese companies to pay dividends. Given the risks, we think an active investing approach is especially important when investing in high-dividend Chinese stocks.
The latest figures published by the People's Bank of China show that credit and liquidity are stalling as demand for new loans declines. Deteriorating confidence in China's prospects explains why households prefer paying down debts while companies borrow less.
Data came in generally in line or slightly weaker than forecasts, as weak confidence continued to depress investment and consumption. New home prices fell by -0.65% MoM in July, compared to a -0.67% MoM drop in June.
EWT has given back some of its year-to-date gain due to US tech selloff spreading to foreign areas, including Taiwan. The Taiwan fund has a high concentration in Taiwan Semiconductor, making it vulnerable to weakness in chip stocks. EWT's valuation is compelling with an impressive EPS growth trajectory, but concentration risk and geopolitical issues should be considered.
EWT: There Are Better Options Than This ETF
Export and import growth both far exceeded forecasts in June, reaching their highest levels since February 2022. Exports to other regions finally recovered in June, after previously being concentrated in North and Central America.
Some South-East Asian economies' strategic advantages and supportive policies are propelling their emergence as a data center powerhouse.
The People's Bank of China kept the one-year medium-term lending facility rate unchanged at 2.5% today, in line with market expectations. We believe that in conjunction with today's data releases and the start of rate cuts in other central banks such as the European Central Bank and Bank of Canada, the odds of a PBoC rate cut in the coming months have risen.