TAIWAN WEIGHTED Index

The Taiwan Weighted Index Live, or TAIEX, is Taiwan's primary index. It was launched in November 1970 and tracks the largest companies listed on the Taiwan Stock Exchange (TWSE). The index follows the capitalization-weighted method for including stocks, so a company's weightage is proportional to its market value.

Features of Taiwan Weighted Index

The Taiwan Weighted Index (TWI) Live is a key stock market index in Taiwan. Below are its notable features:

Comprehensive Representation: The Taiwan Index includes all listed companies on the Taiwan Stock Exchange (TWSE), broadly representing the market's performance. It reflects the overall health of Taiwan’s equity market chart, capturing diverse sectors like technology, finance, and consumer goods.
 

Market Capitalization-Weighted: The Taiwan index is weighted by market capitalization, meaning larger companies (in terms of market value) have a greater influence on its movements. This ensures that more prominent companies have a proportionate impact on the index.
 

Focus on Technology: The index has a significant concentration of technology stocks, especially in semiconductor companies like Taiwan Semiconductor Manufacturing Company (TSMC). The performance of the TWI is often closely tied to the health of the global tech industry.
 

Calculation Methodology: The TWI is a price-weighted index, meaning its value is calculated based on the sum of the prices of constituent stocks, adjusted for market capitalization. The base value of the index is set at 100 points as of 1966.
 

Economic Indicator: The TWI reflects the performance of the Taiwan market chart, and investors, analysts, and policymakers use it as a barometer of the country’s economic health and investor sentiment.

Eligibility Criteria for Stock Selection in the Taiwan Weighted Index

The Taiwan capitalization-weighted stock index is a market-weighted index of all common stocks listed on the Taiwan Stock Exchange (TWSE). Below are 5 key eligibility criteria for stock selection in the index:

Listing on the Taiwan Stock Exchange (TWSE): To be eligible for inclusion, a stock must be listed and actively traded on the Taiwan Stock Exchange.

Market Capitalization: The stock should meet a minimum market capitalization requirement to ensure that it represents a significant part of the market. This requirement helps ensure that the index reflects major companies in Taiwan's economy.

Liquidity: Stocks must demonstrate sufficient liquidity, meaning they should have a minimum trading volume or turnover over a specified period. This ensures the index includes companies with active and frequent trading.

Free-Float Shares: Only the free-float shares of a company (those available for public trading, excluding locked-in shares from insiders) are considered when calculating the stock's weight in the index. This helps reflect the actual market activity.

Financial Health: Stocks with financial irregularities, like bankruptcy proceedings, or stocks that do not meet basic financial reporting standards may be excluded from the index. This criterion helps maintain the overall quality and stability of the index.

TAIEX Index Calculation Method

The Taiwan Capitalization Weighted Stock Index is a market capitalization-weighted index that tracks the performance of stocks listed on the Taiwan Stock Exchange (TWSE). It represents a snapshot of the overall market performance, with the weight of each stock in the index determined by its market capitalization.

Formula for TAIEX Index Calculation:

The TAIEX Index is calculated using the following formula:

TAIEX Index = Aggregate market value / Base value of the current day * 100

Where

Aggregate Market Value: This is the total market capitalization of the stocks included in the TAIEX index. It's the sum of the stock prices of all listed companies in the index, weighted by their respective market capitalization.

Base Value of the Current Day: This is a reference value that represents the market value of the index on the base date, usually set to a specific value (e.g., 100) to allow comparisons over time. It helps normalize the index to a specific value for easier comparison.

100: This is used to scale the index to a value that is easier to read and understand, starting from a base index value (like 100 on the base day).