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The TWII index, also known as the TSEC Taiwan Weighted Index, or the Taiwan Capitalization Weighted Stock Index (TAIEX), is a stock market index which follows the performance of the Taiwan Stock Exchange (TWSE). The TWII lists all stocks traded on the exchange, with the exception of preferred stocks, stocks that have been newly listed, and full delivery stocks, and is one of the key indicators of the strength of the Taiwanese economy.
This page will give you a brief history of the TWII index, let you know how the stocks it tracks are selected, and tell you how you can invest in the index’s performance.
The TWII index began in 1966 with a base value of 100 index points. It follows the performance of the more than 800 stocks which trade on the Taiwan Stock Exchange, which is housed in the world-famous Taipei 101 skyscraper.
The index is commonly used to give an indication of the performance of the economy in Taiwan, and the number of technology stocks traded on the TWSE means that the TWII has had a very strong recent history. Like many indices around the world, the TWII index was hit heavily by the 2007-08 financial crash, but it mounted a faster recovery than most, and has shown strong growth since then.
The best illustration of this is how strongly the TWII has rebounded back from the COVID-19 pandemic. The TWII fell from 11,514.82 on March 5th 2020 to 8,681.34 on March 19th. However, it immediately bounced back – and while other countries have shown slow recovery rates, the TWII hit a new record all-time-high of 12,397.55 on July 21st 2020.
The TWII lists all the stocks that are traded on the Taiwan Stock Exchange, with a few exceptions. The index does not include preferred stocks (complex stocks with more features than a regular stock), full delivery stocks (illiquid shares that do not meet the TWSE’s minimum requirements), or stocks that have only recently been listed on the exchange.
The easiest way to invest in the TWII index is with either an ETF or a mutual fund. Both of these products will allow you to invest in the performance of all the stocks listed by the TSEC Taiwan Weighted Index with only one transaction. Mutual funds are a good option if you’re looking to buy and hold for a long time, but incur relatively high fees and can only be bought or sold at the end of each trading day. ETFs (exchange-traded funds) give investors similar diversification, but also come with the flexibility of being able to be traded on an exchange at any time. If you’re planning on trading in the short term, it’s generally advisable to use an ETF.
The other option when it comes to investing in indices is to buy all of the stocks that an index tracks. This can be a good strategy with blue-chip indices such as the Dow Jones Industrial Average, but it is not a practical option with the TWII as the index tracks such a large number of stocks and you’ll end up racking up high transaction fees and spending a lot of valuable time.