Taipei-headquartered Fubon Asset Management has launched two new ETPs in Hong Kong providing inverse and leveraged exposure to Taiwan’s equity market.
The Fubon FTSE Taiwan Daily (-1x) Inverse Product (7332 HK) and Fubon FTSE Taiwan Daily (2x) Leveraged Product (7232 HK) have listed on the Stock Exchange of Hong Kong.
Each ETP comes with a management fee of 0.99%, though their expense ratios are estimated to be significantly higher, at around 2.20%.
The ETPs provide the inverse (-100%) or twice leveraged (+200%) daily return of the FTSE Taiwan RIC Capped Index.
The index represents the performance of large and mid-cap stocks listed in Taiwan.
Constituents are weighted by float-adjusted market capitalization subject to a single stock cap of 20% and a cap of 48% on the cumulative weight of all stocks above 4.5%.
As of 8 June, the index contained 108 constituents with over half (56.0%) of its total weight allocated to information technology stocks, while the next largest sectors were financials (17.9%) and industrials (7.8%). Taiwan Semiconductor exhibits the largest influence in the index with a weight of 18.1% followed by MediaTek and Hon Hai Precision Industry with weights of 6.5% and 5.8% respectively.
Taiwan’s stock market is relatively volatile due to the significant exposure to technology stocks.
The Taiex, Taiwan’s most widely followed equity index, soared over 90% between March 2020 and April 2021 as technology stocks globally benefitted from consumer trends influenced by the Covid-19 pandemic.
More recently, however, the Taiex lost 8.4% in the week ending 14 May as concerns over surging cases of coronavirus variants, rising inflation, and the stretched valuations in technology sectors lead to a global rout in tech stocks.