By Danish Lim, Investment Analyst for Phillip Nova
The SGX FTSE Taiwan Index Futures, which tracks the FTSE Taiwan Index, provides exposure to around 119 Taiwanese large cap and mid cap stocks. Taiwanese markets have recently made new all-time highs, driven by the AI frenzy. In terms of total return, the underlying cash index is up by 8.02% YTD, beating the Nasdaq’s 7.27% YTD gain. A key characteristic of the index is its tech-heavy composition. Technology (71.68%) is by far the largest sector in the index. This is well above the S&P 500’s technology weightage of 29.8%.
Some of the largest companies in the index include foundry giant Taiwan Semiconductor Manufacturing (TSMC), smartphone chipmaker MediaTek, and apple supplier Hon Hai Precision Industry, also known as Foxconn. Notably, TSMC has an outsized weightage of 43%, owing to its dominance of the foundry market- where it has around 58% of the industry’s market share. TSMC is a lynchpin of the global semiconductor industry, as it manufactures chips for some of the biggest companies in the world including Apple, Nvidia, Advanced Micro Devices, and Sony.
From a technical standpoint, the 4-hour chart indicates that the FTSE Taiwan Index futures contract is approaching the significant psychological resistance level of 1,700. This contract has been in an upward trend since October 2022. Moreover, there was a false break of support around 1,410 – 1,420 in mid-October 2023, followed by a continuation of the uptrend. Several other important technical observations that support our positive outlook include:
– The 14-day Relative Strength Index (RSI) is in bullish territory around 53, suggesting that the contract may have more room for gains before reaching the overbought level of 70. As long as the RSI remains at or above 50, the upward momentum is likely to persist.
– A “Golden Cross” occurred in mid-January when the 50-day moving average crossed above the 200-day moving average, which is generally seen as a bullish signal.
In conclusion, we maintain an optimistic view on the FTSE Taiwan Index futures contract and anticipate it to have moderate upside potential between the 161.8% and 138.2% extension levels before the end of 2024. The narrative surrounding AI continues to be relevant and is expected to be a significant long-term growth driver, despite concerns about a crowded market. We view any short-term weakness or pullback as an opportunity for entry.
Spotlight Deal of the Month – Trade the SGX FTSE Taiwan Index Futures at Only 50 cents*
Click here to learn more about our SGX FTSE Taiwan Index Futures Promotion.
Trade Stocks, ETFs, Forex & Futures on Phillip Nova
Features of trading on Phillip Nova
- Gain Access to Over 20 Global Exchanges
Capture opportunities from over 200 global futures from over 20 global exchanges
- Trade Opportunities in Global Stocks
Over 11,000 Stocks and ETFs across Singapore, China, Hong Kong, Malaysia and US markets.
- Over 90 Technical Indicators
View live charts and trade with ease with over 90 technical indicators available in the Phillip Nova platform
- Trade Multiple Assets on Phillip Nova
You can trade Stocks, ETFs, Forex and Futures on a single ledger with Phillip Nova