Stocks in Taiwan have comfortably outperformed those of other emerging markets in recent years. According to data from index provider MSCI up to the end of February 2024, MSCI Taiwan has achieved an annualised gross return of nearly 13% over 10 years and 17.7% over five years. This compares with just 3.4% and 2.3% over for the broader MSCI Emerging Markets benchmark.

A big contributor to its success is undoubtedly Taiwan Semiconductor Manufacturing Company (2330:TPE) – known as TSMC for short.

It is the world’s leading maker of the chips which are at the forefront of technological developments like AI (artificial intelligence) – for example it makes chips for Nvidia (NVDA:NASDAQ). It has a dominant weighting of 45.6% in the MSCI Taiwan index. The technology sector in general has a big footprint in Taiwan – underlining the fact this is a market full of innovative companies.

The second largest firm by market value in Taiwan – MediaTek (2454:TPE) – is also in the semiconductor space, although unlike TSMC it designs rather than manufactures chips.

The third largest business  – Hon Hai Precision Industry Co. (2317:TPE) – is generally known as Foxconn and is probably best recognised as the manufacturer of Apple’s (AAPL:NASDAQ) iPhone but it also builds products like AI servers.

This outlook is part of a series being sponsored by Templeton Emerging Markets Investment Trust. For more information on the trust, visit www.temit.co.uk

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