THE TAIWAN FUND, INC. March 2023 Monthly Insights
THE TAIWAN FUND, INC.
Manager's Commentary
Market Review
The Taiwan Stock Exchange Weighted Index rose 2.60% in March 2023, in US dollar terms. The top three performing industry groups were Software & Services, Technology Hardware & Equipment, and Consumer Discretionary Distribution & Retail. The top two underperforming industry groups were Health Care Equipment & Services and Consumer Services. The Taiwan TPEx Exchange Index, ("TWOTCI", the over-the-counter index) rose 3.38% in March.
Fund Review (Attribution Reports)
The Taiwan Fund, Inc. (the "Fund") outperformed the Taiwan TAIEX Total Return Index (the "benchmark") in March, 2023, as it benefited largely from rising prices in the Technology Hardware & Equipment industry group. The overweight positions in Semiconductor & Semiconductor Equipment, Technology Hardware & Equipment and the underweight position in the Banks industry groups contributed positively to performance. Conversely, the Fund's performance was negatively impacted by stock selection in the Capital Goods, Materials and Financial Services industry groups. At the stock level, the largest contributors were Taiwan Semiconductor Manufacturing Co. Ltd., Alchip Technologies Ltd., and Asia Vital Components Co., Ltd., while the largest detractors were Advanced Energy Solution Holding Co., Global Unichip Corp., and ASPEED Technology Inc.
Key Transactions
The total securities holding of the Fund stood at 91.34% at March month-end. This represented a slight decrease from 91.96% at February month-end. Of the Fund's securities holdings, 81.2% were held in TWSE traded securities and 10.1% in OTC traded securities. The major changes in the portfolio were the additions to the Technology Hardware & Equipment industry group in continued consideration of the stronger demand of product upgrades and by initiating a position initiating a position in the Consumer Services industry group. The Fund also realized profits through the reduction of positions in the Semiconductor & Semiconductor Equipment and the Telecommunication Services industry groups.
We took on exposure to the Consumer Services industry group through purchases of Gourmet Master Co., Ltd. and Bafang Yunji International Co., Ltd. on demand recovery after the COVID-19 pandemic and store expansions. We have also added weightings in the Technology Hardware & Equipment industry group by increasing our position in E Ink Holding Inc., on the expectation of rising electronic label penetration. Conversely, we have reduced holdings in
the Semiconductor & Semiconductor Equipment Industry, such as eMemory Technology Inc. by taking advantage of rising valuations and in both Realtek Semiconductor Corp. and Novatek Microelectronics Corp. based on a weak demand outlook.
1Taiwan TAIEX Total Return Index.
26 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 | $248.8 |
(millions) | |
Median Market | $3.05 |
Cap (in billions) | |
Distribution | Annual |
Frequency | |
Management | Nomura Asset |
Firm | Management U.S.A. Inc. |
Fund Manager
Sky Chen
Lead Portfolio Manager
Performance
(US$ Returns as of 3/31/2023)
Fund Benchmark1
One Month | 3.06% | 2.67% |
Three Month | 19.39% | 13.57% |
One Year | -16.24% | -11.53% |
Three Year | 27.22% | 21.86% |
(Annualized) | ||
Net Asset Value/Market Price
(as of 3/31/2023)
NAV/Market Price | $33.31 / $26.96 |
High/Low Ranges (52-Week)
High/Low NAV | $39.77 / $23.07 |
High/Low Market Price | $33.4355 / $18.695 |
Premium/Discount to NAV | -19.06 |
(as of 3/31/2023) | |
Fund Data (Common Shares)
Shares | 7,470,494 |
Outstanding | |
Average Daily | 13,815 |
Volume | |
Expense Ratio2 | 1.62% |
NOMURA ASSET MANAGEMENT
Nomura Asset Management U.S.A. Inc.
Manager's Commentary (continued)
Outlook and Strategy
As expected, the US Federal Reserve delivered a 25 basis point rate hike, setting the target range of the Federal Funds rate at 4.75% to 5.00%. This demonstrated that policymakers remain focused on reducing inflation. The US Federal Reserve is aware of the risks generated by the recent stresses from certain regional banks and associated monitoring developments, though it sees these risks as contained for the time being. In an attempt to rein in inflation expectations, the Taiwan Central Bank also raised the benchmark policy rate by
12.5 basis points to 1.875% at the quarterly meeting in March 2023. Also, we believe that the sluggish macro economy has hurt Taiwan exports. In February, exports fell by 17.1% (year on year) to USD $31.05 billion, down for a sixth consecutive month.
Downward revisions to earnings estimates have stabilized over the past two months, which, we believe, implies that the bottom is not very far off. The upcoming first quarter reporting of results will be an important check point. We expect that the inventory adjustment generally ends in the first half of 2023, to be followed by demand recovery in the second half of 2023. Additionally, as we touched on last month, the recent theme in AI technology has continued gaining popularity. We believe that the investments in AI technology and supply chains will materialize over the long term, with near-term share price movements driven mainly by expectations. Our strategy remains focused on fundamentals and to continue to seek out companies with secular growth and reasonable valuations.
March 2023 Monthly Insights
THE TAIWAN FUND, INC.
Returns (%)
1 | 3 | 1 | 3 | 5 | 10 | Since | ||
Month | Month | YTD | Year | Year | Year | Year Inception | ||
NAV | 3.06 | 19.39 | 19.39 | -16.24 | 27.22 | 14.87 | 12.48 | 9.65 |
Market Price | 0.94 | 16.76 | 16.76 | -18.05 | 25.71 | 13.21 | 11.19 | 8.01 |
Taiwan TAIEX | 2.67 | 13.57 | 13.57 | -11.53 | 21.86 | 11.10 | 11.07 | - |
Total Return Index | ||||||||
Taiwan TAIEX | 2.42 | 13.30 | 13.30 | -15.61 | 17.53 | 6.83 | 7.00 | - |
Price Index | ||||||||
MSCI Taiwan | 3.01 | 14.75 | 14.75 | -13.72 | 20.99 | 11.10 | 11.05 | - |
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: 1.02%. for the 12 month period ended August 31, 2022, before waiver fee. The expense ratio after the fee waiver is 0.96%.
Premium/Discount (1/3/00 - 3/31/23)
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 | 3/23 |
1/00 | |||||||||||||||||||||||
Past performance is not indicative of future results. |
Sector Breakdown (%)
Fund | Benchmark | |
Information | 72.49 | 57.11 |
Technology | ||
Consumer | 5.97 | 5.78 |
Discretionary | ||
Communication | 3.65 | 3.20 |
Services | ||
Industrials | 3.45 | 7.39 |
Consumer Staples | 2.98 | 2.33 |
Materials | 1.41 | 8.04 |
Financials | 1.39 | 12.39 |
Energy | 0.00 | 1.65 |
Real Estate | 0.00 | 1.29 |
Health Care | 0.00 | 0.65 |
Utilities | 0.00 | 0.17 |
Top 10 Holdings (%) | |
Taiwan Semiconductor | 23.93 |
Manufacturing Co. Ltd. | |
eMemory Technology, Inc. | 4.59 |
Global Unichip Corp. | 4.05 |
Delta Electronics, Inc. | 3.98 |
Nuvoton Technology Corp. | 3.85 |
Asia Vital Components Co. Ltd. | 3.47 |
Alchip Technologies Ltd. | 3.42 |
ASPEED Technology, Inc. | 3.30 |
Advanced Energy Solution Holding | 3.22 |
Co. Ltd. | |
Lotes Co. Ltd. | 2.86 |
Holdings and sector weightings are subject to change. As of 3/31/2023.
3
March 2023 Monthly Insights
THE TAIWAN FUND, INC.
Portfolio Characteristics
Fund | |
Number of Issues | 44 |
Foreign Holdings (%) | 91.34 |
Cash and Other Assets less Liabilities (%) | 8.66 |
Dividend Yield (%) | N.A. |
As of 3/31/2023. |
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
March 2023 Monthly Insights
THE TAIWAN FUND, INC.
All Portfolio Holdings
As of March 31, 2023
Company | |||||
Sector | (exchange ticker) | Price TWD | Holding | Value US$ | of Fund |
INFORMATION TECHNOLOGY | 72.49 | ||||
Taiwan Semiconductor Manufacturing Co. Ltd. | 2330-TW | 533.00 | 3,402,000 | 59,553,855 | 23.93 |
eMemory Technology, Inc. | 3529-TW | 1860.00 | 187,000 | 11,423,598 | 4.59 |
Global Unichip Corp. | 3443 TW | 1085.00 | 283,000 | 10,084,736 | 4.05 |
Delta Electronics, Inc. | 2308-TW | 301.00 | 1,002,000 | 9,905,641 | 3.98 |
Nuvoton Technology Corp. | 4919-TW | 149.50 | 1,950,000 | 9,574,678 | 3.85 |
Asia Vital Components Co. Ltd. | 3017-TW | 141.00 | 1,864,000 | 8,632,039 | 3.47 |
Alchip Technologies Ltd. | 3661-TW | 1240.00 | 209,000 | 8,511,700 | 3.42 |
ASPEED Technology, Inc. | 5274-TW | 2635.00 | 95,000 | 8,221,529 | 3.30 |
Lotes Co. Ltd. | 3533-TW | 918.00 | 235,972 | 7,114,617 | 2.86 |
Gold Circuit Electronics Ltd. | 2368-TW | 97.30 | 1,772,100 | 5,663,037 | 2.28 |
MediaTek, Inc. | 2454-TW | 787.00 | 202,000 | 5,221,250 | 2.10 |
Accton Technology Corp. | 2345-TW | 319.00 | 407,000 | 4,264,160 | 1.71 |
SDI Corp. | 2351-TW | 132.00 | 955,000 | 4,140,241 | 1.66 |
E Ink Holdings, Inc. | 8069-TW | 184.50 | 673,000 | 4,078,118 | 1.64 |
Jentech Precision Industrial Co. Ltd. | 3653-TW | 476.50 | 240,000 | 3,755,973 | 1.51 |
Hon Hai Precision Industry Co. Ltd. | 2317-TW | 104.00 | 916,000 | 3,128,795 | 1.26 |
Wiwynn Corp. | 6669-TW | 1125.00 | 76,000 | 2,808,112 | 1.13 |
Tong Hsing Electronic Industries Ltd. | 6271-TW | 198.50 | 385,100 | 2,510,628 | 1.01 |
Genius Electronic Optical Co. Ltd. | 3406-TW | 385.50 | 181,000 | 2,291,666 | 0.92 |
Gigabyte Technology Co. Ltd. | 2376-TW | 133.50 | 481,000 | 2,108,991 | 0.85 |
Compeq Manufacturing Co Ltd | 2313-TW | 46.35 | 1,376,000 | 2,094,674 | 0.84 |
Largan Precision Co Ltd | 3008-TW | 2175.00 | 29,000 | 2,071,599 | 0.83 |
Realtek Semiconductor Corp. | 2379-TW | 387.50 | 141,000 | 1,794,482 | 0.72 |
Globalwafers Co. Ltd. | 6488-TW | 518.00 | 78,000 | 1,327,006 | 0.53 |
Grand Process Technology Corp. | 3131-TW | 308.50 | 9,000 | 91,190 | 0.04 |
CONSUMER DISCRETIONARY | 5.97 | ||||
Eclat Textile Co. Ltd. | 1476-TW | 495.00 | 287000 | 4,665,900 | 1.88 |
Fulgent Sun International Holding Co. Ltd. | 9802-TW | 133.50 | 505000 | 2,214,221 | 0.89 |
Feng TAY Enterprise Co. Ltd. | 9910-TW | 193.00 | 290000 | 1,838,246 | 0.74 |
Nien Made Enterprise Co. Ltd. | 8464-TW | 327.00 | 160000 | 1,718,368 | 0.69 |
Makalot Industrial Co. Ltd. | 1477-TW | 216.00 | 196000 | 1,390,459 | 0.56 |
Gourmet Master Co. Ltd. | 2723-TW | 145.00 | 272000 | 1,295,344 | 0.52 |
Merida Industry Co. Ltd. | 9914-TW | 168.50 | 198000 | 1,095,755 | 0.44 |
Bafang Yunji International Co. Ltd. | 2753-TW | 185.00 | 55000 | 334,182 | 0.13 |
Taiwan Paiho Ltd. | 9938-TW | 59.00 | 100000 | 193,776 | 0.08 |
Giant Manufacturing Co. Ltd. | 9921-TW | 176.00 | 20000 | 115,609 | 0.05 |
COMMUNICATION SERVICES | 3.65 | ||||
Chunghwa Telecom Co. Ltd. | 2412-TW | 119.50 | 1,285,000 | 5,043,353 | 2.03 |
Far EasTone Telecommunications Co. Ltd. | 4904-TW | 75.20 | 1,639,000 | 4,048,043 | 1.63 |
INDUSTRIALS | 3.45 | ||||
Advanced Energy Solution Holding Co., Ltd. | 6781-TW | 718.00 | 340,000 | 8,017,735 | 3.22 |
Nak Sealing Technologies Corp | 9942-TW | 121.00 | 143,000 | 568,290 | 0.23 |
CONSUMER STAPLES | 2.98 | ||||
President Chain Store Corp. | 2912-TW | 269.50 | 549,000 | 4,859,364 | 1.95 |
Uni-President Enterprises Corp. | 1216-TW | 71.90 | 1,080,000 | 2,550,357 | 1.02 |
MATERIALS | 1.41 | ||||
Swancor Holding Co. Ltd. | 3708-TW | 102.50 | 645,000 | 2,171,361 | 0.87 |
Century Iron & Steel Industrial Co. Ltd. | 9958-TW | 94.60 | 431,000 | 1,339,112 | 0.54 |
FINANCIALS | 1.39 | ||||
Chailease Holding Co. Ltd. | 5871-TW | 223.50 | 470000 | 3,450,037 | 1.39 |
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 April 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 April 2023 17:41:52 UTC.