Taiwan Stock Exchange

The Taiwan Stock Exchange, or TWSE trading centre, was founded in 1961 and lists almost 900 Taiwanese companies with a $1.95 trillion overall market capitalisation (market cap). This article will discuss the TWSE trading history, indices, operations and rules, before outlining how to begin day trading on the TWSE, providing tips and strategies. We have also produced a list of the best brokers for Taiwan Stock Exchange trading:

What is the Taiwan Stock Exchange?

The Taiwan Stock Exchange (or TWSE) is one of the three main markets in Taiwan. Clients can buy and sell securities like stocks and exchange-traded funds (ETFs). The self-stated goals of the TWSE trading centre are to “enhance Taiwan’s economic prosperity and strengthen national development”, as well as ensure the safety of public investments and enable easier fundraising for companies. Currently, there are over 850 listed companies on the market.

Brief History

Founded in October of 1961, the Taiwan Stock Exchange opened its doors for public trading in February of 1962. The TWSE trading centre later became a founding member of what is now the Asian and Oceanian Stock Exchange Federation (AOSEF) in May of 1982 and became the 29th member of the World Federation of Exchanges (WFE) in 1989.

In 2002, the TWSE trading centre joined with the FTSE to create what is known as the FTSE TWSE Taiwan 50 Index, which tracks the performance of the top 50 Taiwanese companies through a market capitalisation-weighted index. Later in 2003, Taiwan’s first exchange-traded fund (ETF) was introduced using the Taiwan 50 Index.

Taiwan stock exchange real time quotes and filings

The Taiwan Stock Exchange saw its first listing of a foreign company in May 2010: Integrated Memory Logic Limited (IML), a US-based company.

Indices

TAIEX

The main TWSE index is the Taiwan Stock Exchange Capitalisation Weighted Stock Index (TAIEX), which measures the performance of aggregate listed stocks on the exchange. It has been an integral part of the market from its early days, first published in 1967 using 1966 as the base year with a closing level value of 100. This index excludes preferred and full-delivery stocks, as well as those that have been listed for less than a month on the TWSE trading centre. It is considered the indicator of the performance of the Taiwanese securities market.

Historical data for the index showed notable growth in the late 1980s, with point increases of over 100% recorded in 1987 (+125%) and 1988 (+118%), followed by +88% in 1989. However, the second-largest drop in the market value was seen in 1990, recording a change of -52.9%. The biggest crash recorded on the TAIEX was in 1974 (-61%).

The official website for the Taiwan Stock Exchange offers listed company/entity search functionality, facilitating easy up-to-date stock price lookup.

FTSE TWSE Taiwan 50

The FTSE TWSE Taiwan 50 Index comprises the biggest 50 (blue-chip) listed companies by market value. On the TWSE trading centre, the ETF for the top 50 companies has a code of 0050. It was created in collaboration with FTSE and was the first narrow-based index published in Taiwan, done so in 2002 with a base value of 5000. Today, it represents over 70% of the Taiwanese market. One third (17) of the listed companies in this index are part of the technology sector, where the second-largest sector is banking (9).

The top five players (at the time of writing) of this index and their ticker codes are as follows:

  • Taiwan Semiconductor Manufacturing (2330)
  • MediaTek (2454)
  • Hon Hai Precision Industry (2317)
  • United Microelectronics (2303)
  • Delta Electronics (2308)

The weighting method used is free-float market capitalisation, which is calculated by multiplying the share price by the total number actively traded on the market, excluding locked-in shares or those held by insiders.

FTSE TWSE Taiwan 50 30% Capped

The premise of the FTSE TWSE Taiwan 50 with a 30% cap is similar to the non-capped index. It showcases the top 50 largest listed companies on the TWSE trading exchange, albeit capping them at their quarterly review so that no single company can represent more than 30% of the index. The FTSE TWSE Taiwan 50 has no such limit.

FTSE TWSE Taiwan Mid-Cap 100

This index comprises the next 100 largest listed companies on the TWSE trading centre, again ranked by their market value. The index notably excludes the constituents of the FTSE TWSE Taiwan 50 Index, effectively representing the performance of mid-cap stocks. This can be used to measure the growth sectors, with a representation of almost 20% of the Taiwanese market. The code for the ETF relating to this index is 0051.

FTSE TWSE Taiwan Dividend+

This is a special yield weighted index, specifically designed to measure and rate the performance of the high-yielding stocks within the Taiwan Stock Exchange (FTSE TWSE Taiwan 50 and FTSE TWSE Taiwan Mid-Cap 100 indices). This index uses one-year forecast dividend yields of stocks to select the top-ranking 30, where the weightings inside the index are determined by these values rather than the traditional market-cap method.

This index excludes any constituents that are classed by ICB as Closed-End Investments, defined as corporate entities like investment and venture capital trusts. The ETF shares code for this index is 0056.

Taiwan Stock Exchange Vs Taipei Exchange

An alternative to the Taiwan Stock Exchange is the Taipei Exchange, also known as TPEx. Formally known as Gre Tai Securities Market (GTSM), this exchange focuses on trading over-the-counter (OTC) bonds and administering the Taiwan OTC Exchange (TWO). The main differentiator between the two markets is that the criteria for a company to be listed on the TWO is lower than that of the TWSE trading exchange. In fact, for those enterprises looking to IPO in Taiwan, getting listed on the TWO can be beneficial towards becoming listed on the TWSE. To avoid confusion, note that the Market Identifier Code (MIC) for the Taipei Exchange is ROCO.

Trading Hours

The Taiwan Stock Exchange (TWSE) trading hours in Taipei Standard Time (GMT+8) are as follows:

  • 08:30 – 09:00: Pre-Open Session
  • 09:00 – 13:30: Trading Session
  • 13:30 – 14:30: After-Hours Session

The above market opening times are valid for weekdays between Monday and Friday, inclusive. It is important to note that TWSE trading is not possible on Saturdays or Sundays (the weekend). The TWSE does not close for lunch, either.

Is The Taiwan Stock Exchange Open Today?

The TWSE trading centre has set holidays on which no trading can be done. The number of holidays that are taken varies slightly with each calendar year (e.g. the number of holidays in 2020 is fewer than 2021) but these typically include New Year, Chinese New Year, Labour Day and other national days or public holidays. It is recommended to check these exact days on the TWSE website.

TWSE Rules And Regulations

Rules For Getting Listed On The TWSE Trading Centre

For a company or enterprise to be listed on the Taiwan Stock Exchange, it must meet a set of criteria. For a domestic (Taiwanese) company, these are:

  • Duration Of Corporate Existence: The company must have been registered and incorporated for at least three years before applying.
  • Amount Of Capital Stock: The company must have a paid-in capital of NT$ 600 million or more, as well as having issued at least 30 million shares of its common stock.
  • Profitability: The net income before tax in the financial reports must meet some specific criteria and not have any accumulated deficit in the final accounting for the recent fiscal year.
  • Dispersion Of Share Ownership: There must be at least 1000 registered shareholders, where at least 500 are not insiders and there are no juristic persons that hold more than 50% of the shares. The number of shares that are not excluded must also equate to at least 20% or greater of the total issued shared, or number at least 10 million.

If a company wishing to be listed on the TWSE trading centre is within the food or catering industry, then extra criteria must be met. These mainly cover establishing laboratories for self-inspection, delivering raw materials for government inspection and establishing food safety plans with independent specialists.

Trade Regulations

Being a member of the International Organisation of Securities Commissions (IOSCO), the TWSE trading firm and market follow the restrictions of the Principles for Financial Market Infrastructures (PFMI) — a set of international standards for market infrastructures. These standards ensure a satisfactory quality/standard for payment systems, trading systems etc.

Documents and detailed information relating to the standards outlined by the PFMI have been published by the IOSCO and can be found online.taiwan stock exchange capitalization weighted stock index

Reviewal Of Indices

The FTSE TWSE Taiwan Index series has a standard system of review, while the Dividend+ index reviewal process differs slightly. Quarterly reviews take place every year, after which announcements are made about which securities are to be interested or removed.

To calculate which constituents to include in these TWSE trading indices, all eligible securities are ranked in order of their full market cap. First, the constituents of the respective indices are “marked”, then eligible securities are added to the indices if they are in the top:

  • 40 securities for the FTSE TWSE Taiwan 50 Index.
  • 130 securities for the FTSE TWSE Taiwan Mid-Cap 100 Index.

A company is removed during the periodic review if it falls below a position that is considered a cutoff for the respective index. These cutoffs are:

  • 61st rank or below for FTSE TWSE Taiwan 50 Index.
  • 171st rank or below for the FTSE TWSE Taiwan Mid-Cap 100 Index.

If the remaining constituents count is below the required number, the next largest (highest ranked) company that is not part of the index is added. If it is the opposite — i.e. there are too many constituents in the index — then the reverse happens where the lowest-ranked companies in the index are removed until the required number is met. As always, if a company is within the 50 Index, it is removed from the Mid-Cap 100 Index.

The FTSE TWSE Taiwan Dividend+ index is reviewed semi-annually during June and December, where the 30 constituents are modified. To select which 30 companies are shown on this TWSE index, the top 150 listed companies from the TWSE trading centre are ranked in descending order based on their dividend yields (note: not returns).

The current constituents of the Dividend+ index are then noted, along with the top 15 securities from the yield rankings. Those ranked 46th and below are removed from the index. Should there be fewer than 30 constituents in the index after this process, the next largest constituents are added (16th place and below) one by one until the 30 places are filled. Conversely, if more than 30 stocks are listed after the initial process, then the lowest ranking constituents are removed until the magic number 30 is reached.

Trading Rules And System

When trading on the Taiwan Stock Exchange, you should be aware of slight differences between how some securities are traded. The stocks featured on the TWSE trading centre are sometimes listed under an altered trading method category. In layman’s terms, this translates to requiring the broker to take full delivery of any funds or securities before making trading quotes.

Additionally, TWSE trading positions are handled in units and orders on the market are placed in multiples of these. A trading unit constitutes 1000 shares. If ordering several shares below the size of a trading unit, these must go through as odd lot orders.

Since October 2020, the buying and selling of odd-lot shares have been allowed during normal trading hours. These orders are matched every three minutes and trades are executed according to price and time priority.

The TWSE trading centre has made use of continuous trading since March 2020. This means you can set a trading price limit on your orders and they will be satisfied using the lowest to highest priced sell orders.

It is also important to keep in mind what the TWSE defines as block trading. On this market, a block trade consists of either a single security that exceeds 500 trading units (NT$ 15 million) or at least five different stocks whose combined value exceeds NT$ 15 million. As mentioned earlier, 500 trading units is equivalent to a trading volume of 500,000 shares.

How To Start Day Trading On The TWSE

Before beginning your day trading journey on the Taiwan Stock Market, we recommend you carefully consider the following.

Choose A Broker

To effectively begin TWSE trading, you will need to use a suitable broker. Brokers execute transactions, such as the purchase or sale of stocks, on your behalf and take away many of the complexities involved with interacting with the TWSE.

Some of the key factors for consideration when looking for the best Taiwan Stock Exchange brokers are:

  • Price – Even a small difference in trading fees can quickly add up when dealing with a large volume of trades every day. Compare their commission costs (fees), transparency in structure and account requirements.
  • Trading Platform – A straightforward trading platform is essential when working in a fast-paced day trading environment. As a day trader, you will want to keep track of different charts, graphs and other tools to make the right decisions and know the latest live (real time) trading quotes.
  • Customer Service – When TWSE trading, a halt can cost you big money. Any issues on the platform need to be dealt with swiftly and that requires comprehensive and reliable customer support from your broker. It is not unusual to find some firms offering 24/7 support and some even in several different languages.

Make sure you do thorough research on different brokers before you chose one to settle with. It is one of the most important trading decisions you make. For a full guide to choosing the best broker for you, along with our recommendations, see here.

Pre-Trading Strategy

After picking your broker, you cannot dive into TWSE trading straight away without an effective strategy in place. The importance of using effective technical analysis cannot be overlooked in today’s world.

Current best practices use analysis of real-time data, price patterns and charts to make decisions. Looking at historical data — such as the trailing six months (or TSM for short) — can paint a picture of the performance of securities and allow you to make educated guesses on their possible future performance.

Before beginning TWSE trading, we recommend you set up at least a half-hour before the normal trading hours. During this period you may want to think about the following things:

  • Catch Up On The Latest News – The price of a company’s stocks is influenced by their fiscal performance. New government guidelines or protocols can benefit or restrict companies. It is therefore important to read up on recent events and check what impacts (if any) they may have had. Big events could mean big opportunities or big losses.
  • Review Share Quotes – It is often useful to review the price to earnings (PE) ratio of companies. This will usually indicate if a stock has been overvalued or if investors currently see future potential.
  • Decide Which Stocks To Follow – Given that the TWSE trading centre is based in Taiwan, you may not recognise the majority of the companies listed on their indices. Have a look at who the current top performers are and spot any potential Taiwan Stock Exchange shares worth trading. Yageo (2327), Yang Ming (2609), Yuanta (2885), Qisda Corporation (2352), HTC (2498) and Shanghai Bank (5876) are some of the biggest Taiwan Stock Exchange names.

Most day traders tend to start by thinking of the big names when deciding which stocks to place orders on. Although a tempting thought given the successes of the big players on the market, this is often where a lot of day traders already try to make their mark.

To avoid this heavy competition, you should look at developing a niche within the market, as the market trends with the most popular stocks do not necessarily correlate with sound investment decisions.

Volume

It is also important to evaluate the pre-market prices of shares, as these can throw you off. It is not unusual to see an increase of 5% in the pre-market, only to have it reduce to 1% after opening. This can often be attributed to small volumes of trades being made, as well as price shifts in securities. It is recommended to avoid stocks that normally conduct trades at low volumes, especially those that yield a high increase in value (eg 20%) from low orders. Additionally, a high volume of trades can often serve as a validation of trends.

Taiwan Stock Exchange PFMI Trading Fees
TWSE Building

If you have the available capital, you should consider making orders of a higher volume when TWSE trading, where you would benefit from trading stocks that allow you to enter and exit with ease. Securities that are experiencing above-average order volumes should be noted. To give an example, if security A usually trades around 5000 units a day but, soon after the market opens, it has already traded 10,000 units, then it might be a stock that is worth keeping a close eye on.

Helpful Tips

News Sources

Keep up to date with what is going on in the Taiwan Stock Exchange by frequently reading the latest market news. This tip is essential to your TWSE trading success, as it could mean the difference between a day of plentiful returns and one filled with losses. Having access to the latest information and announcements will allow you to refine your trading strategy before most of the market, giving you that needed edge.

Companies traded on the Taiwanese markets, their related index and press releases can be found featured on some popular news sources, such as Bloomberg, Yahoo Finance and Google Finance.

In addition to featuring the latest trading market news, you will more than likely be able to view historical data for various indices and share values on the previous day’s closing. Yahoo Finance, for instance, has great tools that you can utilise to keep track of the performance of different stocks both during day trading and after-

Educational Resources

If you look back ten, twenty or even thirty years, you will find that the instruments, tools and markets are all very different to what can be seen today. You must learn to adapt to these changes, or you will soon find yourself left in the dust of TWSE trading.

Fortunately, there is a wide range of detailed and valuable resources available to you. To list a few:

  • Book And eBooks – There are many books available that cover the Taiwan Stock Market, covering all possible angles. Some may just focus on strategies and tactics, whilst others may explore future outlooks, predictions and analysis.
  • PDFs – These are accessible resources that can help you find and analyse the complex historical market data, going over price history through 1-year to 10-year charts.
  • Forums And Chat Rooms – The internet has made it easier to discuss trading ideas with other like-minded day traders, allowing you to learn from the experiences of others. If utilised correctly, this could be an amazing resource, even for those new to TWSE trading.
  • Online Courses And Tutorials – Often the best place to start, these resources from finance gurus and successful traders will help you get to grips with the Taiwan Stock Exchange and markets. They can help you learn about options, short selling, multi-option products (MOPs) and the various market mechanisms.
  • Charts – Use these to get additional factual information about the stocks you are interested in, which often feature various trackers and yields.

Official TWSE Websites

The latest rules and regulations are listed on the Taiwan Stock Exchange and its trading regulator websites. You can also find the market prospectus and quantitative disclosure, holiday calendars and any ticker symbols for relevant indices and constituents list(s). Additionally, these sites can help you understand many of the terms specific to the market. Other information, such as the ownership and leadership of the exchange, are also stated.

Automation

After establishing your TWSE trading strategy, you may want to think about using automated trading. This involves the use of algorithms and robots to make trade orders on your behalf, utilising continuous trading mechanisms employed by the exchange. Making use of automation will allow you to make much higher volumes of trades, whilst maintaining control of your positions through price limits and other risk management systems. Making a greater volume trades through this method could potentially mean an increase in your returns.

Keep A Journal

A great way to monitor your progress and keep track of your decisions and why you made them is to keep a TWSE trading journal. This could help you analyse your past performance and can be done through spreadsheet software such as Excel or Google Sheets. It is generally wise to keep a note of:

  • Price
  • Entry and exit position
  • Purchase/sell date and time
  • The reasoning for making the trade

With this data in hand, you will be able to spot any mistakes in your strategy early on and avoid any further losses. If you find yourself without such a journal, it may take months for you to spot even the smallest of mistakes.

Demo Accounts

Whether you are new to day trading or are a TWSE veteran, it can always be beneficial to have a demo account set up. These do not require any real monetary deposits, so any orders can be mocked up and played around with without fear of losses. Demo accounts can be a great way to test out new strategies or learn how to navigate around the market. Once you start earning consistent profits, you should consider opening a normal (live) account.

Final Word On TWSE Trading

The Taiwan Stock Market is a different beast from the popular western markets such as FTSE, Dow Jones and Nasdaq. The unfamiliarity of its companies presents opportunities for keen and adventurous day traders, with potential profits ripe for the picking with the right calls. Armed with the information, tips and suggested research found in this article, you should be ready to dive into TWSE trading.

FAQs

Where Can I Find The List Of All Stocks Listed On The TWSE?

A full list of the companies listed for TWSE trading can be found on the exchange’s website. Some brokers that support the trading of Taiwanese stocks may not list them all, though, so check your broker’s list.

Is It Possible To Track The Performance Of Both The TWSE And TPEx?

There is an index that tracks the combined TWSE and TPEx markets called the Formosa Stock Index (FRMSA).

Does The TWSE Have An Index Specific To Technology-Focused Companies?

Yes, there is the FTSE TWSE Taiwan Technology Index.

Where Can I Find The Latest Quotes For The Indices That Were Mentioned In The Article?

Any broker that lists an index will have a live price chart available that shows the latest price quotes. Alternatively, sites like Yahoo Finance or Trading View have a wide range of financial instruments.

How Can I Check When The Market Holidays Are?

You can find the holiday calendar for the current, future and past years on the TWSE trading centre’s website. Most brokers will also specify the trading hours and holidays of their linked stock exchanges by way of an integrated economic calendar.

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