iShares MSCI Taiwan ETF

EWT

Market cap $6.75B

EWT offers exposure to Taiwan's large- and mid-cap stocks, with a heavy tilt toward tech (66% of holdings), especially Taiwan Semiconductor, which alone makes up ~24% of the ETF. The expense ratio is relatively high at 0.59%, especially compared to the Franklin FTSE Taiwan ETF at 0.19%. At a P/E around 21x, the risk-reward balance doesn't seem compelling, as the country faces geopolitical risks.

Despite mounting macro headwinds at the start of the year, Chinese equities have continued to deliver positive performance. While near-term flows can provide further upside, the durability for the equity rally will hinge on policy choices ahead.

Among APAC equity markets, Australia has a higher beta to oil prices while India, Indonesia and Thailand have lower betas. Domestic political uncertainties have been one main reason for the decoupling trend seen in Indonesia and Thailand.

EWT remains a buy due to strong momentum, attractive valuation, and a technical breakout above key resistance. The ETF's performance is heavily tied to Taiwan Semiconductor, which now makes up over 24% of the fund and benefits from the AI rally. EWT offers a high dividend yield, growing assets, and robust liquidity, but investors should note its elevated risk and sector concentration.

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Sentiment remains fragile in China and Hong Kong stock market even China services activities have improved in December. Weak market breadth and a persistent bearish trend of the Chinese yuan since November has added to more woes to the Hang Seng Index.