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by Xav Feng.
Key Benchmarks Performance
Taiwan market hit a record high in 2024. The key benchmark of Taiwan Stock Exchange Weighted Index had rallied by 28.5% (5,104.29 points in the year of 2024 which was the highest point gain in a single year, and the percentage gain was the highest since 2009). The Taiex’s percentage gain was the second highest in the world, trailing only the tech-heavy Nasdaq Composite index. This remarkable performance was followed by US S&P 500 (+23.3%), Japan’s Nikkei 225(+19.2%), Hong Kong’s Hang Seng Index (+17.7%), and Singapore’s Straits Times Index (+16.9%), while Korea and Brazil were underperforming ones. As of the end of 2024, the Taiwan Stock Exchange’s market capitalization hit a new high of TWD$99.72 trillion (US$3.04 trillion), smashing the previous high of TWD$95.52 trillion at the end of 2021.
The Taiwanese stock market’s impressive rise is largely driven by Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest foundry for semiconductor contract manufacturing. TSMC, which constitutes 38% of the market capitalization, has seen its stock price soar by 81.3% in 2024. Due to its significant share price gains, TSMC saw its market cap rise by NT$12.5 trillion from a year earlier, and it contributed more than 3,800 points to the Taiex’s gains in 2024. Second to TSMC in terms of market cap, was iPhone assembler, Hon Hai Precision Industry also helped drive the Taiex’s gains and its shares soared 76.1% in 2024.
Figure 1: Global Key Benchmarks Performance
Source:LSEG Lipper, as of 2024/12/31
RFS Taiwan Performance by LGC Analysis
There are overall 2000 funds registered for sale in Taiwan market with a total 24 Lipper Global Classifications. Among all 24 classifications, Equity China posted 3.1% on average and took the leading positions among all MPF classifications while Equity Hong Kong, Equity Greater China and Equity Japan posted negative return of 2.9%, 2.6% and 1.3%, respectively in December of 2024. For the year of 2024(as of 2024/12/31), the best outperforming sectors was Equity Sector Communication Services(+42.9%), Equity Sector Financials(+35.7%), Equity Singapore (+34.1%), Equity India Small and Mid-Cap(+32.6%) and Equity Malaysia(+31.6%). The underperforming sectors were Equity Brazil (-27.6%), Equity Emerging Mkts Latin Am (-23.1%), Equity Korea (-11.1%), Bond JPY (-8.0%) and Equity Indonesia (-7.4%).
The the best performing single fund and delivered over 45% percentage growth in 2024 were: UPAMC Great China Small-Mid Cap Fund TWD (+54.2%), MSIF Global Insight Fund A USD Acc (+52.3%), UPAMC Global Innovative Tech Fund TWD (+50.9%), MSIF US Growth Fund I USD Acc (+50.8%), Taishin Taiwan Small and Medium Cap Fund (+47.5%), Fubon AI New Trends Multi-Asset Fund A TWD (+47.2%), Yuanta Taiwan Top 50 ETF Feeder Fund A TWD (+47.2%), Fubon Fund A (+46.5%), UPAMC New Asian Technology And Energy Fund (+46.4%), LionGlobal Singapore Trust SGD Accumulation (+45.9%) and Franklin Templeton SinoAm AI Hi-Tech Fund TWD (+45.7%).
Figure2:Top/Bottom 10 RFS TW Performance by Lipper Global Classifications In 2024
Source:LSEG Lipper, as of 2024/12/31
Outlook
The US Federal Reserve has cut interest rates three times since last September with a total reduction of 100 basis points. However, the biggest force to hit Taiwan and all Asia region in 2025 will likely be Donald Trump’s second term, which kicks off in late January. Donald Trump has threatened 10% across-the-board tariffs for all imports and 60% on all Chinese imports. This would have a huge impact on Asian exports and a global knock-on effect. There will be more turbulence, conflict and uncertainties and even more risks in Sino-US relations in the next few years.
Generative AI is opening new markets for computing and enabling automation for a 100 trillion dollars of global industries, and the chip and computer industries, in which Taiwan plays a big role. In the next wave of AI, Taiwan’s large manufacturing footprint is a strategic advantage, and with robotics it can scale beyond the island’s relatively small population.