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By Danish Lim, Senior Investment Analyst, Phillip Nova
The SGX FTSE Taiwan Index Futures contract tracks the FTSE Taiwan RIC Capped Index, offering exposure to roughly 130 large- and mid-cap Taiwanese stocks. To reduce concentration risk, the index caps any single stock at 20% of total weight.
Taiwanese equities have surged to record highs, largely fuelled by strong demand linked to artificial intelligence and semiconductors. In 2025, the futures contract delivered a total return of 23.88%, outperforming the Nasdaq 100’s 21% gain over the same period.
While the longer-term outlook remains bullish, near-term consolidation is likely. Momentum indicators suggest the market is currently overbought, and geopolitical risks remain an important tail risk. The 14-day Relative Strength Index (RSI) is hovering around 74, signalling the potential for a short-term pullback.
Technically, prices could retreat toward the 123.6% Fibonacci retracement level near 2,250, which also aligns with the 100-day moving average. As long as the contract holds above this level, momentum is expected to rebuild, with upside targets at the 161.8% extension near 2,500, and potentially 2,600 在 176.4% extension. The bullish thesis remains intact unless the contract records a sustained break below the 2,250 level.
A defining feature of the index is its heavy technology exposure, which accounts for over 62% of total weight—nearly double the S&P 500’s tech allocation. Major constituents include TSMC, MediaTek， 和 Hon Hai Precision Industry (Foxconn).
From a tactical standpoint, TSMC’s weighting is a key consideration. As the world’s leading semiconductor foundry and a critical supplier to companies like Apple, Nvidia, AMD, and Sony, TSMC is widely viewed as a proxy for global AI infrastructure spending. While TSMC represents about 43% of the uncapped FTSE Taiwan Index, its weight is limited to around 20% in the capped version. This cap helps reduce concentration risk, making the FTSE Taiwan RIC Capped Index—and its futures contract—more diversified and potentially less volatile.
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