The Taiwan Futures Exchange (TAIFEX) is set to launch Taiwan Semiconductor 30 Futures (SOF) and Shipping and Transportation Sector Futures (SHF) on 27 June 2022 in response to heightened market demand for industry-specific risk management tools and further expand its sector derivatives offerings.
Taiwan is the unrivalled worldwide leader in the global chip supply chain. The country’s semiconductor industry cluster ranked top in the world by market share in both the foundry industry and the packaging and testing industry, and No.2 in integrated circuit (IC) design. TIP Taiwan Semiconductor Total Market Select 30 Index tracks the performance of the top 30 semiconductor companies ranked by market capitalization listed on the Taiwan Stock Exchange and the Taipei Exchange, including the internationally renowned Taiwan Semiconductor Manufacturing Company (TSMC), MediaTek Inc. (MTK) and United Microelectronics Corporation (UMC). The new SOF will allow investors to manage their exposure to Taiwan’s globally-critical industry and at the same time, capture new opportunities. In addition to the regular session, SOF can also be traded overnight for investors to effect timely risk management actions during the hours of the US market, where the index’s major components are listed as American Depositary Receipts (ADRs).
Another sector of the country that shines through the pandemic gloom is its internationally competitive shipping and transportation sector. As a key player in the world’s container shipping industry, Taiwan has benefitted from surging demand. Its major maritime enterprises, including Evergreen, Yang Ming and Wan Hai, are constantly ranked in the list of global top 12 liners by vessel capacity, according to Alphaliner. SHF’s underlying index, the TAIEX Shipping and Transportation Sub- Index, comprises of companies including Eva Airways, China Airlines, and Taiwan High Speed Rail, alongside the aforementioned three shippers, and benchmarks the overall performance of Taiwan’s shipping and transportation stocks. The roll-out of SHF will help market participants to gain exposure to this pivotal sector while navigating through the disruption.
In the past two years, TAIFEX's efforts to introduce a wide range of products across themes and sectors, as well as the launch of small-sized contracts, have enabled a broad spectrum of trading strategies for investors and boosted the overall liquidity and foreign institutional participation, with turnover from foreign investors reaching close to 32% of total trading volume in 2022 Q1. With investors’ rising demand for hedging sector exposures, the Exchange anticipates steady growth for the new SOF and SHF contracts, similar to the momentum seen in the two mini futures contracts introduced in 2021 for the electronics and finance sectors. For more information, visit the webpages of SOF and SHF.
