If you’ve ever contemplated the performance of the foreign stock market, one index that may often come up is the TAIEX. This benchmark indicates the performance of Taiwanese, captures trends in various sectors, including technology and manufacturing, and gives a view of Asian markets.
Let’s look at what TAIEX is, how it works, and what it means to invest in it.
Table of contents
What is the TAIEX stock market index?
TAIEX stands for the Taiwan Stock Exchange Capitalisation Weighted Stock Index. It is the principal index that tracks the performance of listed common shares on the Taiwan Stock Exchange (TWSE). In simpler terms, TAIEX is a Taiwan stock index that captures the market value of Taiwanese listed companies over time.
It excludes preferred stocks, newly listed stocks with less than one calendar month of listing, and full-delivery stocks (those requiring full payment at settlement). The index was first published in 1967, using 1966 as the base year with a value of 100.
Understanding the basics of stock market indices
A stock market index is a statistical measure which tracks an assortment of stocks that represent all (or a portion) of one market. It makes it easier to monitor the overall performance of the market than having to monitor every stock individually.
Some important ideas one may want to grasp are:
- Benchmarking: The index might serve as a busy investor's comparison to see how well their portfolio is performing in comparison to the market.
- Weighting: Indices also give each stock different weights (perhaps by market cap), so larger companies carry more weight than smaller ones.
- Types: Some indices track changes in price only (the price index), while other indexes incorporate dividends as well (the total return index).
Also Read: What is SGX Nifty?
The role of stock market indices
Stock market indexes tend to serve the following functions:
- Market barometer: Provides an indication of the overall market direction.
- Passive investment benchmark: Exchange-traded funds and index funds seek to replicate the performance of an index.
- Yardstick of comparison: Active funds use an index to measure how well their performance may stack up against the market.
- Market signal: When an index’s value changes, it might indicate changes in investor sentiment, a policy decision, or a change in other macroeconomic factors.
Different types of stock market indices
Indices differ by:
- Coverage: Some cover all stocks (broad indices), others only large caps or specific sectors.
- Weighting method: Common types are market-cap weighting, price weighting, equal weighting, or factor-based.
- Return type: Price indices do not include dividends while total return indices include them.
- Geographic or thematic focus: Some indices focus specifically on certain sectors and themes, such as a technology index or one focusing on emerging markets.
TAIEX, for instance, comes in both a price index and a total return index version.
The origin and history of the TAIEX
The Founding of TAIEX: The Taiwan Stock Exchange (TWSE) was founded in 1961 and began operations in 1962. The TAIEX was launched in 1970, with the base year of 1966 (value = 100).
Important events in TAIEX history
Over time TAIEX has undergone changes to conform to global standards:
- In early years, the weighting methods were less defined; by 1996, TAIEX adopted a full capitalisation-weighted method to conform to global standards.
- In the early 2000s electronic trading and automation were adopted, enhancing market efficiency.
- TAIEX has also made clarifications to the methodology of the index and the rules governing the constituents in given timeframes, all under the authority of the Taiwan Index Plus Corporation (TIP) and the TWSE.
Through these changes, TAIEX has matured and become a core benchmark in Asia’s equity markets.
How the TAIEX stock market index works
The Composition of the TAIEX: The constituent stocks are all common stocks listed on the TWSE that meet eligibility criteria. Stocks that are newly listed (less than one month), preferred shares, or “full-delivery” stocks are excluded. As of recent counts, the number of constituents is over 1,000 (for example, 1,034 as of late 2025) in the TAIEX universe. These constituents come from many sectors, including semiconductors, electronics, finance, manufacturing, and services.
How TAIEX values are calculated
TAIEX is a capitalisation-weighted index. That means each stock’s weight is proportional to its total market value. Thus, large companies tend to have a greater influence on the index.
The TAIEX formula is (Sum of Price × Shares Outstanding for all constituents) / divisor, which may be adjusted for free float and so on. The divisor is deemed necessary to provide continuity for any corporate events like stock splits, new issues, etc. When corporate events occur that impact continuity, the TWSE will adjust the base or divisor to avoid a large artificial jump in the index.
Note: TAIEX is published in real time (intraday) by TWSE, and daily closing values are shared through official sources.
The significance of the TAIEX in global finance
TAIEX plays an important role in the following ways:
- It acts as a gateway for global investors to track and invest in Taiwan’s economy.
- Because Taiwan is a major hub for semiconductors and advanced electronics, TAIEX often reflects trends in global tech demand.
- Movements in TAIEX might correlate with shifts in supply chains (e.g.- chips, electronics components) that may impact other markets.
- It is used as a benchmark for ETFs or investment products targeting Taiwanese equities.
TAIEX and the Taiwanese economy
Because TAIEX encompasses nearly all major publicly traded Taiwanese companies, it serves as a reflection of Taiwan’s economic health.
- Many Taiwan-listed firms are globally exposed (exporters of chips, electronics, machinery). Their fortunes depend on global demand and supply chains.
- A rise in TAIEX may signal strength in exports, investment, and investor confidence.
- A downward trend may reflect global headwinds (e.g., trade tensions), supply disruption, or weakening demand.
Given Taiwan’s critical role in the global semiconductor supply, TAIEX often reacts to shifts in technology demand and geopolitical developments.
Investing in the TAIEX
Investors interested in exposure to TAIEX have several routes:
- Exchange-Traded Funds (ETFs) or Index Funds that track TAIEX (or Taiwan equity indices).
- Exchange-traded products such as futures or derivatives based on TAIEX.
- Direct investing via access to Taiwanese markets (if local broker or platform permits).
- Global funds or ADRs (American Depositary Receipts) that hold Taiwanese stocks.
The goal is to replicate the index’s movement (minus costs, tracking error, and currency effects).
Comparing TAIEX with Indian Benchmarks
Just like Taiwan has the TAIEX to track the performance of its listed companies, India has its own key benchmarks such as the Nifty 50 and BSE Sensex. All three indices serve a similar purpose — reflecting the health and direction of their respective markets — but their compositions differ.
The TAIEX is tilted toward technology and electronics, driven by Taiwan’s semiconductor and export-oriented economy. In contrast, Indian indices are more diversified, with large weights in financial services, energy, IT, and consumer sectors that mirror domestic growth and consumption patterns.
To invest in indices such as the Nifty 50 or Sensex, investors may consider index funds or ETFs, which are passively managed funds that track a market index and seek to replicate its performance (subject to tracking error).
For investors in India who wish to gain exposure to global markets like Taiwan, international or Asia-Pacific equity mutual funds and ETFs offer a regulated route. However, as with any overseas investment, investors should consider currency fluctuations, geopolitical factors, and global market risks in addition to standard equity volatility.
Potential benefits of investing in TAIEX
- Broad market exposure: Gives diversified access to Taiwan’s equity market in one view.
- Technology tilt/growth exposure: Because Taiwan is a semiconductor and electronics hub, TAIEX tends to capture tech upswings.
- Global linkage: You indirectly participate in global supply chain dynamics.
- Benchmark alignment: If you believe in Taiwan’s growth story, it may be easier to benchmark your performance vs. TAIEX.
Risks and challenges in TAIEX investment
- Concentration risk: High weightage to large tech or semiconductor firms may mean downturns in those sectors might disproportionately affect TAIEX.
- Currency risk: Movements in New Taiwan Dollar (NTD) relative to your home currency may erode potential gains or amplify losses.
- Geopolitical risk: Taiwan’s unique cross-strait, regional, and global tensions may introduce volatility.
- Market liquidity / access: Some investors may face higher transaction costs or restrictions investing into Taiwan.
- Valuation volatility: Being growth/tech-driven, valuations may swing sharply in sentiment-driven markets.
Also Read: What is a mutual fund?
Conclusion
The Taiwan Index (TAIEX / Taiwan stock index) serves as a primary benchmark for Taiwan’s equity market. It captures broad market performance through a capitalisation-weighted approach. Over decades, it has evolved and diversified, reflecting Taiwan’s role as a tech export powerhouse. Investing in TAIEX offers exposure to sectors like semiconductors and global electronics, but comes with risks including concentration, geopolitical volatility, and currency fluctuations. Given these trade-offs, investors are advised to consider their own risk tolerance, horizon, and access methods before engaging with Taiwan’s markets.
FAQs
What companies are included in the TAIEX index?
Constituents are common stocks listed on the TWSE that meet eligibility rules (excluding preferred, newly listed and full-delivery stocks). The index has over 1,000 constituent stocks across diverse sectors.
How is the TAIEX calculated?
TAIEX uses a capitalisation-weighted formula: summing weighted market capitalisations, adjusting for corporate actions (splits, dividends) via a divisor, to maintain continuity across events.
What is the historical performance of the TAIEX?
Since its base value of 100 in 1966, the index has seen large swings; for example, surging during technology booms and plunging during crises. In recent times, on October 8, 2025, it closed at 27,063.68.
What are the risks of investing in the TAIEX?
Risks include concentration in large tech names, currency fluctuations, geopolitical tensions involving Taiwan, and potential market access or liquidity constraints.
How does TAIEX compare with other major stock indices globally?
Unlike indices such as the S&P 500 or FTSE 100, TAIEX tends to be concentrated in technology and electronics sectors, and is more sensitive to semiconductor cycles. Its potential returns are also subject to currency effects and regional political risks.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
This document should not be treated as endorsement of the views/opinions or as investment advice. This document should not be construed as a research report or a recommendation to buy or sell any security. This document is for information purpose only and should not be construed as a promise on minimum returns or safeguard of capital. This document alone is not sufficient and should not be used for the development or implementation of an investment strategy. The recipient should note and understand that the information provided above may not contain all the material aspects relevant for making an investment decision. Investors are advised to consult their own investment advisor before making any investment decision in light of their risk appetite, investment goals and horizon. This information is subject to change without any prior notice.
The content herein has been prepared on the basis of publicly available information believed to be reliable. However, Bajaj Finserv Asset Management Ltd. does not guarantee the accuracy of such information, assure its completeness or warrant such information will not be changed. The tax information (if any) in this article is based on current laws and is subject to change. Please consult a tax professional or refer to the latest regulations for up-to-date information.
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