THIS came to mind after reading a Bloomberg article on July 13, 2024, titled "Taiwan, India threaten China's top spot in EM equity portfolios." It notes that, thanks to robust stock market performance, Taiwan and India each command about 19 percent weightings in the MSCI EM Index, versus 22.8 percent for China. As recently as 2020, China's weighting peaked at 40 percent. As recently as June 2021, their weightings were about 38 percent for China, 15 percent for Taiwan and 10 percent for India.
The article points out that earnings in China have been flat and have been growing about 13 percent in Taiwan and India. Nvidia is counted, though Taiwan-based, as an American stock and much of the 33 percent gain this year in the now $2.6-trillion market cap Taiwan exchange was driven by the growth in Nvidia supplier Taiwan Semiconductor. China trades at nine times forward PE, while Taiwan's Taiex Index and India's Nifty 50 trade at about 20 times PE given its high earnings growth, which is seen as sustained. This was driven by inflows of about $9 billion into ex-China Asia with most going to Taiwan, South Korea and India versus outflows from China mostly from the Hong Kong trading link. A commentator quoted in the article noted it is because of tech for those three stars.
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