• FXTM launches 6 new stock indices
     
  • 11 of FXTM’s 18 total indices hit all-time peaks so far in 2024
     
  • TW50 index is latest to join the record-high party
     
  • TW50 historically outperformed many Asian/European peers
     
  • Less-volatile TW50 may be more suited for risk averse traders

 

This week, FXTM launched 6 new stock indices.

This now brings FXTM’s tally to 18 different stock indices to choose from.

And the TW50 index made it a debut to remember!

Since launching across FXTM’s trading platforms yesterday …

The TW50 has posted its highest-ever intraday price of 1647.5 today (Tuesday, March 5th)!

This index, which tracks Taiwanese stocks, also appears on course to close the day above 1640 for the first time in its history!

FUN FACT: Of the 18 stock indices currently offered by FXTM, 11 have already hit their respective all-time peaks so far in 2024.

 

What is a stock index?

Imagine a stock index being a basket of many different stocks.

The index measures the overall performance of those stocks inside that “basket”.

 

What does the TW50 stock index track?

FXTMs TW50 stock index tracks the performance of the FTSE Taiwan RIC Capped Index.

This index aims to capture the overall performance of 119 different large- and mid-cap stocks in Taiwan.

 

 

3 key things to know about the TW50 index:

 

1) Taiwan Semiconductor Manufacturing is the largest member of the TW50 index!

Taiwan Semiconductor Manufacturing (TSMC), accounts for 21% of the total index.

Hence, with the mania over artificial intelligence in full swing (AI is expected to be a major earnings driver for chipmaking companies), the boost to TSMC’s share prices have helped push the TW50 to a fresh all-time peak.

 

2) Performs better than many Asian/European counterparts

So far in 2024, the FTSE Taiwan RIC Capped Index has climbed by 5.8%.

Amongst the 6 Asian stock indices offered by FXTM …

TW50 is the second-biggest gainer on a year-to-date basis (at the time of writing).

First place belongs to the JAP225 index (up 20% year-to-date), while the CN50 index is in third place (+4.3% year-to-date).


For a longer historical timeframe, the FTSE Taiwan RIC Capped Index has surged by 64.8% since 16th June 2000.

NOTE: The FTSE Taiwan RIC Capped Index was launched on 29 September 2017. However, historical data is only available from June 2000 onwards.

That has the TW50 index comfortably beating European stock indices such as the EU50, the FRA40, and even the UK100 over the same period (16th June 2000 – present)!

 

3) Lower Volatility

The creators of this index, FTSE Russell, intended for its FTSE Taiwan RIC Capped Index to have relatively more stability (less volatile).

This is done by more evenly distributing the weights assigned to the stocks on this index across 10 different industries (e.g. tech, financial, industrial, etc).

NOTE: To be clear, tech stocks still account for 60% of the TW50, making it a tech-heavy index.

Since June 2000, this TW50 index has an average 30-day volatility reading of 19.28.

Over the same period, the TW50 has demonstrated less risk of crazy price swings (volatility) on average compared to:

  • NAS100: 23.16
     
  • JAP225: 21.29
     
  • HK50: 21.07
     
  • GER40: 20.49
     
  • EU50: 20.20
(numbers above are 30-day volatility figures)

Hence, while traders may have less of a chance at stunning gains on outsized upswings, the TW50’s more-stable performance could also lower the risk of jaw-dropping losses from sharp unexpected declines.

In short, given its less-volatile nature, risk-averse traders may find the TW50 index more suited for them.

 

How much higher can TW50 climb?

Over the next 12 months, Wall Street analysts expect that the FTSE Taiwan RIC Capped Index can add on another 100 index points to reach 1745.8.

If so, that represents a further 6% of potential gains for the TW50.

However, given its stunning, TSMC-fuelled ascent of late, this index could be ripe for a technical pullback in the near future.

After all, its 14-day Relative Strength Index (RSI) is already well above the 70 threshold which marks textbook "overbought" conditions.