THE TAIWAN FUND, INC. June 2023 Monthly Insights
THE TAIWAN FUND, INC.
Manager's Commentary
Market Review
The Taiwan Stock Exchange Weighted Index ("TWSE") rose 2.09% in June 2023, in US dollar terms, with electronics again leading the rise. The top three outperforming industry groups were Media & Entertainment, Technology Hardware & Equipment and Transportation. The top three underperforming industry groups were Telecommunication Services, Energy and Pharmaceuticals, Biotechnology & Life Sciences. The Taiwan TPEx Exchange Index, ("TWOTCI", the over-the-counter index) declined 2.46% in June in US dollar terms.
Fund Review (Attribution Reports)
The Taiwan Fund, Inc. (the "Fund") outperformed the Taiwan TAIEX Total Return Index (the "Benchmark") in June 2023, as it benefited from the outperformance of electronics holdings. On an industry group level, the overweight position
in Semiconductor & Semiconductor Equipment, Technology Hardware & Equipment and Consumer Durables & Apparel contributed positively to performance. Conversely, the Fund's performance was negatively impacted by the slight overweight position in Telecommunication Services. At the stock selection level, the largest contributors were Asia Vital Components Co. Ltd. Quanta Computer Inc. and Gigabyte Technology Co. Ltd., while the largest relative detractors were Chunghwa Telecom Co., Lotes Co. Ltd. and Globalwafers Co. Ltd.
Key Transactions
The total securities holdings of the Fund stood at 88.62% at June month-end. This represented a slight decrease from 91.89% at May month-end. Of the Fund's securities holdings, over 88% were held in TWSE traded stocks and over 11% in OTC ("over-the-counter") securities. The major changes in the portfolio were the reductions to the Semiconductor & Semiconductor Equipment industry group given the weaker than expected smartphone demand and to realize gains on
IP ("Internet Protocol") services after the recent share price rally. Within the Technology Hardware & Equipment industry group, the Fund has increased its positions in downstream ODM ("original design manufacturer"), due to strong demand for AI ("Artificial Intelligence") servers. However, on the other hand, the Fund decreased its positions in PCB ("Printed Circuit Board") makers, as Intel Corporation and Advanced Micro Devices, Inc. are likely to further delay the launch of their new server platforms.
The Fund added exposure in the Technology Hardware & Equipment industry group by increasing its position in Quanta Computer Inc. as it benefitted from the LT (Intel Trusted Execution Technology, formerly known as LaGrande Technology) trend in automotive and AI server demand growth. The Fund reduced its exposure in Gold Circuit Electronics Ltd. due to the delay in new server platform launches and high valuations and sold off its position in Unimicron Technology Corp. on
1Taiwan TAIEX Total Return Index.
2Six months ended February 28, 2023, annualized, unaudited, before fee waiver. The unaudited expense ratio after the fee waiver is 1.45%.
Fund Data
Description | Seeks long-term |
capital appreciation | |
primarily through | |
investments in equity | |
securities listed in Taiwan. | |
Inception Date | December 23, 1986 |
Total Fund Assets | $287.6 |
(millions) | |
Median Market | $3.28 |
Cap (in billions) | |
Distribution | Annual |
Frequency | |
Management | Nomura Asset |
Firm | Management U.S.A. Inc. |
Fund Manager
Sky Chen
Lead Portfolio Manager
Performance
(US$ Returns as of 6/30/2023)
Fund Benchmark1
One Month | 7.86% | 2.09% |
Three Month | 15.73% | 5.80% |
One Year | 28.93% | 14.05% |
Three Year | 21.84% | 15.76% |
(Annualized) | ||
Net Asset Value/Market Price
(as of 6/30/2023)
NAV/Market Price | $38.55 / $31.34 |
High/Low Ranges (52-Week)
High/Low NAV | $39.09 / $23.07 |
High/Low Market Price | $31.81 / $18.70 |
Premium/Discount to NAV | -18.72% |
(as of 6/30/2023) | |
Fund Data (Common Shares)
Shares | 7,460,281 |
Outstanding | |
Average Daily | 15,579 |
Volume | |
Expense Ratio2 | 1.62% |
NOMURA ASSET MANAGEMENT
Nomura Asset Management U.S.A. Inc.
1
June 2023 Monthly Insights
THE TAIWAN FUND, INC.
Manager's Commentary (Key Transactions continued)
lower than expected utilization for substrate products. The Fund also reduced its exposure in the Semiconductor & Semiconductor Equipment group by eliminating its position in MediaTek, Inc. on weak smartphone demand, and reduced its position in Global Unichip Corp. on rich valuations. However, on the other hand, the Fund increased its position in Globalwafers Co. Ltd. anticipating increasing demand from EV ("electronic vehicle") and HPC ("high performance computing") over the long term.
Outlook and Strategy
As we expected, the US Federal Reserve Board has paused the rate hike at the June FOMC ("Federal Open Market Committee") meeting. FOMC chairman Powell emphasized the need to see more data, (generally inflation and unemployment), in order to gauge the appropriate policy path going forward. We believe that the inflation will come off gradually given the higher base in the second half of 2022. Together with the strong job market, it is possible to see another rate hike in July. On the other hand, Taiwan's industrial production rebounded to 3.0% MoM SA (seasonally adjusted), ending a 6-month streak of declines. Production of electronic components rebounded to 6.5% MoM SA, accounting for most of the gain. However, leading indicators for IP were mixed. The manufacturing PMI ("purchase managers index") dropped for the third consecutive month, while export orders in US dollar terms rebounded.
In June, the technology based industry groups have continued to outperform, with a specific focus on AI servers. AI server demand has emerged rapidly recently, with no inventory burden while supplies been constrained by a shortage of capacity in chips and advanced packaging, etc. As a result, liquidity has flowed into the market segment with a fear-of-missing-out sentiment. Flows and expectations stimulated share price performance for stocks, especially in the AI camps. We believe that the long-term trend has been firm but the investment capped by enterprises' CapEx ("capital expenditure") budget and shortages in semiconductor capacity in 2023. According to our channel reviews, the demand from major CSP ("configuration service provider") players are expected to be solid and capital expenditure will take off in 2024. Therefore, we foresee a better 2024, due to a low base in 2023 and the back-to-normal inventory levels. Our strategy is to hold onto the positions in top tier companies in the semiconductor, HPC, AI and green energy categories. Additionally, we have carefully watched the inventory digestion and demand recovery in consumer staples and discretionary industries, which have been near the bottom, in our view, and await a better entry point.
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June 2023 Monthly Insights
THE TAIWAN FUND, INC.
Returns (%)
1 | 3 | 1 | 3 | 5 | 10 | Since | ||
Month | Month | YTD | Year | Year | Year | Year Inception | ||
NAV | 7.86 | 15.73 | 38.17 | 28.93 | 21.84 | 19.32 | 13.93 | 10.02 |
Market Price | 9.31 | 16.25 | 35.73 | 24.76 | 21.44 | 17.83 | 12.96 | 8.40 |
Taiwan TAIEX | 2.09 | 5.80 | 20.16 | 14.05 | 15.76 | 13.32 | 11.51 | - |
Total Return Index | ||||||||
Taiwan TAIEX | 0.66 | 4.22 | 18.08 | 8.93 | 11.30 | 8.85 | 7.28 | - |
Price Index | ||||||||
MSCI Taiwan | 1.69 | 4.52 | 19.94 | 12.45 | 15.10 | 13.45 | 11.32 | - |
Index (net) | ||||||||
Calendar Year Returns (%)
2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | |
NAV | -6.43 | 11.17 | 28.44 | -14.96 | 47.11 | 41.97 | 55.09 | -36.27 |
Market Price | -10.52 | 10.05 | 33.61 | -19.11 | 46.75 | 39.81 | 58.26 | -38.54 |
Taiwan TAIEX | -10.40 | 17.81 | 29.45 | -7.86 | 32.19 | 35.62 | 29.04 | -26.80 |
Total Return Index | ||||||||
Taiwan TAIEX | -13.81 | 13.11 | 24.56 | -11.51 | 26.46 | 31.01 | 25.59 | -30.15 |
Price Index | ||||||||
MSCI Taiwan | -11.72 | 18.54 | 27.53 | -8.93 | 36.37 | 40.99 | 26.13 | -29.76 |
Index (net) | ||||||||
Past performance is not indicative of future results.
Returns are expressed in US dollars and are annualized except for periods of less than one year. Source: Nomura Asset Management U.S.A. Inc., utilizing data from State Street Bank & Trust Company. Returns for the Fund are historical returns that reflect changes in net asset value and market price per share during each period and assume that dividends and capital gains, if any, were reinvested. Net asset value is total assets less total liabilities divided by the number of shares outstanding. NAV performance includes the deduction of management fees and other expenses. NAV and market price returns do not reflect broker sales charges or commissions, which would reduce returns. Expense Ratio: 1.62% for the six months ended February 28, 2023, annualized, unaudited, before fee waiver. The unaudited expense ratio after the fee waiver is 1.45%.
Premium/Discount (1/3/00 - 6/30/23)
10%
0%
-10%
-20%
-30% | 1/01 | 1/02 | 1/03 | 1/04 | 1/05 | 1/06 | 1/07 | 1/08 | 1/09 | 1/10 | 1/11 | 1/12 | 1/13 | 1/14 | 1/15 | 1/16 | 1/17 | 1/18 | 1/19 | 1/20 | 1/21 | 1/22 1/236/23 |
1/00 |
Past performance is not indicative of future results.
Sector Breakdown (%)
Fund | Benchmark | |
Information | 71.08 | 57.91 |
Technology | ||
Consumer | 4.98 | 5.94 |
Discretionary | ||
Communication | 3.11 | 2.94 |
Services | ||
Industrials | 3.33 | 7.43 |
Consumer Staples | 2.65 | 2.31 |
Materials | 2.40 | 7.51 |
Financials | 1.07 | 12.27 |
Energy | 0 | 1.53 |
Real Estate | 0 | 1.26 |
Health Care | 0 | 0.65 |
Utilities | 0 | 0.24 |
N/A | 0 | 0.02 |
Top 10 Holdings (%) | |
Taiwan Semiconductor | 20.93 |
Manufacturing Co. Ltd. | |
Asia Vital Components Co. Ltd. | 5.14 |
Quanta Computer, Inc. | 4.76 |
Global Unichip Corp. | 4.32 |
eMemory Technology, Inc. | 4.27 |
Gigabyte Technology Co. Ltd. | 4.07 |
Delta Electronics, Inc. | 3.85 |
Alchip Technologies Ltd. | 3.85 |
Advanced Energy Solution Holding | 3.09 |
Co. Ltd. | |
ASPEED Technology, Inc. | 3.02 |
Holdings and sector weightings are subject to change. Source: State Street Bank & Trust Company, Bloomberg L.P. as of 6/30/2023.
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June 2023 Monthly Insights
THE TAIWAN FUND, INC.
Portfolio Characteristics
Fund | |
Number of Issues | 40 |
Foreign Holdings (%) | 88.62 |
Cash and Other Assets less Liabilities (%) | 11.38 |
Dividend Yield (%) | N.A. |
As of 6/30/2023. |
Distribution History (10 Year)
Long-term | Short-term | |||||
Ex-dividend Date | Record Date | Payable Date | Distribution/Share | Income | Capital Gain | Capital Gain |
12/26/14 | 12/30/14 | 1/9/15 | 2.633200 | 0.000000 | 2.633200 | 0.000000 |
12/28/17 | 12/29/17 | 1/9/18 | 0.660000 | 0.660000 | 0.000000 | 0.000000 |
12/20/18 | 12/21/18 | 1/4/19 | 1.707800 | 0.000000 | 1.707800 | 0.000000 |
12/27/19 | 12/30/19 | 1/10/20 | 1.699100 | 1.469500 | 0.164500 | 0.065100 |
12/28/20 | 12/29/20 | 1/8/21 | 3.312200 | 0.375900 | 0.615600 | 2.320700 |
12/27/21 | 12/28/21 | 1/10/22 | 2.922700 | 0.478000 | 2.444700 | 0.000000 |
Distribution/Share includes income, long-term capital gains, and short-term capital gains.
4
June 2023 Monthly Insights
THE TAIWAN FUND, INC.
All Portfolio Holdings
As of June 30, 2023
Company | |||||
Sector | (exchange ticker) | Price TWD | Holding | Value US$ | of Fund |
INFORMATION TECHNOLOGY | 71.08 | ||||
Taiwan Semiconductor Manufacturing Co. Ltd. | 2330-TW | 576.00 | 3,255,000 | 60,199,393 | 20.93 |
Asia Vital Components Co. Ltd. | 3017-TW | 271.00 | 1,697,705 | 14,772,369 | 5.14 |
Quanta Computer, Inc. | 2382-TW | 152.00 | 2,802,000 | 13,675,095 | 4.76 |
Global Unichip Corp. | 3443 TW | 1,605.00 | 241,000 | 12,419,689 | 4.32 |
eMemory Technology, Inc. | 3529-TW | 2,210.00 | 173,000 | 12,276,004 | 4.27 |
Gigabyte Technology Co. Ltd. | 2376-TW | 243.50 | 1,496,000 | 11,696,319 | 4.07 |
Delta Electronics, Inc. | 2308-TW | 344.50 | 1,002,000 | 11,083,466 | 3.85 |
Alchip Technologies Ltd. | 3661-TW | 1,795.00 | 192,000 | 11,065,838 | 3.85 |
ASPEED Technology, Inc. | 5274-TW | 2,850.00 | 95,000 | 8,693,349 | 3.02 |
Nuvoton Technology Corp. | 4919-TW | 128.50 | 1,950,000 | 8,045,562 | 2.80 |
Wistron Corp. | 3231-TW | 90.80 | 2,658,000 | 7,749,246 | 2.69 |
Lotes Co. Ltd. | 3533-TW | 860.00 | 213,972 | 5,908,456 | 2.05 |
E Ink Holdings, Inc. | 8069-TW | 225.00 | 731,000 | 5,281,029 | 1.84 |
Jentech Precision Industrial Co. Ltd. | 3653-TW | 645.00 | 240,000 | 4,970,380 | 1.73 |
SDI Corp. | 2351-TW | 130.00 | 955,000 | 3,986,258 | 1.39 |
Globalwafers Co. Ltd. | 6488-TW | 497.00 | 234,000 | 3,734,142 | 1.30 |
WinWay Technology Co. Ltd. | 6515-TW | 778.00 | 124,000 | 3,097,561 | 1.08 |
Parade Technologies Ltd. | 4966-TW | 1,075.00 | 66,000 | 2,278,091 | 0.79 |
Wiwynn Corp. | 6669-TW | 1,420.00 | 38,000 | 1,732,569 | 0.60 |
Gold Circuit Electronics Ltd. | 2368-TW | 146.00 | 334,100 | 1,566,203 | 0.54 |
Grand Process Technology Corp. | 3131-TW | 543.00 | 9,000 | 156,914 | 0.05 |
Globalwafers Co. Ltd. | 6488-TW | 504.00 | 78,000 | 1,279,375 | 4.98 |
Grand Process Technology Corp. | 3131-TW | 477.50 | 9,000 | 139,859 | 0.85 |
CONSUMER DISCRETIONARY | 0.78 | ||||
Eclat Textile Co. Ltd. | 1476-TW | 499.50 | 152,000 | 2,437,798 | 0.66 |
Fulgent Sun International Holding Co. Ltd. | 9802-TW | 138.00 | 505,000 | 2,237,634 | 0.64 |
Makalot Industrial Co. Ltd. | 1477-TW | 302.00 | 196,000 | 1,900,560 | 0.63 |
Feng TAY Enterprise Co. Ltd. | 9910-TW | 196.50 | 290,000 | 1,829,697 | 0.61 |
Gourmet Master Co. Ltd. | 2723-TW | 143.50 | 391,000 | 1,801,554 | 0.49 |
Nien Made Enterprise Co. Ltd. | 8464-TW | 342.50 | 160,000 | 1,759,540 | 0.22 |
Merida Industry Co. Ltd. | 9914-TW | 222.00 | 198,000 | 1,411,357 | 0.06 |
Bafang Yunji International Co. Ltd. | 2753-TW | 178.50 | 110,000 | 630,449 | 0.05 |
Taiwan Paiho Ltd. | 9938-TW | 54.40 | 100,000 | 174,670 | 3.11 |
Giant Manufacturing Co. Ltd. | 9921-TW | 230.00 | 20,000 | 147,698 | 1.67 |
COMMUNICATION SERVICES | 1.44 | ||||
Chunghwa Telecom Co. Ltd. | 2412-TW | 116.50 | 1,285,000 | 4,806,708 | 3.33 |
Far EasTone Telecommunications Co. Ltd. | 4904-TW | 78.60 | 1,639,000 | 4,136,377 | 3.09 |
INDUSTRIALS | 0.24 | ||||
Advanced Energy Solution Holding Co., Ltd. | 6781-TW | 813.00 | 340,000 | 8,875,403 | 3.09 |
Nak Sealing Technologies Corp | 9942-TW | 149.50 | 143,000 | 686,430 | 0.24 |
CONSUMER STAPLES | 0.92 | ||||
President Chain Store Corp. | 2912-TW | 282.50 | 549,000 | 4,979,772 | 1.73 |
Uni-President Enterprises Corp. | 1216-TW | 76.30 | 1,080,000 | 2,645,860 | 0.92 |
MATERIALS | 0.66 | ||||
Century Iron & Steel Industrial Co. Ltd. | 9958-TW | 136.00 | 1,148,000 | 5,013,020 | 1.74 |
Swancor Holding Co. Ltd. | 3708-TW | 91.60 | 645,000 | 1,897,028 | 0.66 |
FINANCIALS | 1.07 | ||||
Chailease Holding Co. Ltd. | 5871-TW | 204.00 | 470,000 | 3,078,553 | 1.07 |
Source: State Street Bank and Trust Company, Nomura Asset Management U.S.A. Inc.. | 5 |
Note: Cash (including for these purposes cash equivalents) is not included. |
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Disclaimer
The Taiwan Fund Inc. published this content on 26 July 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 July 2023 11:19:09 UTC.
