What is the MSCI Index?？

MSCI was originally the abbreviation of the famous Morgan Stanley Capital International (Morgan Stanley Capital International), also known as "Morgan Stanley," is a company specializing in the issuance of indices, mainly responsible for the preparation of relevant derivative financial commodity measures and global indices based on countries, markets, regions and industries, and provide customers with a reference for investment decisions.。

Through the performance of the index, investors can further assess the current trend direction and appearance of the overall market, and the MSCI index is an index compiled and issued by Morgan Stanley, also known as the Morgan and Morgan Stanley indices.。

MSCI currently manages more than 200,000 indices and has more than 1,300 equity ETFs tracking MSCI-managed indices。

What is MSCI Quarterly Adjustment?？

Every year, the economic development of each region will be reviewed regularly, and MSCI weight adjustment, that is, every 3 months, mainly to adjust the weight of each component, the months are: February, May, August, November, usually at the end of the month to adjust and take effect after the close.。

Among them, February and August belong to the "quarterly adjustment," the weight adjustment is relatively small, while May and November for the "semi-annual adjustment," the two months of weight adjustment is relatively large.。

The content of the adjustment will generally be announced 20 days in advance and adjusted after the close of trading on the day of the adjustment.。As a result, the last trade on the day of the adjustment, there is usually a volume explosion, which can lead to significant fluctuations in the price of individual stocks。

What is the impact of the MSCI correction on the stock market?？

The global index compiled by MSCI, which is used by more than 80% of fund managers of professional institutions worldwide as a reference indicator for capital allocation and investment strategies.。

Therefore, MSCI's adjustment of index weights will directly affect the planning and investment direction of fund managers of most investment institutions.。In other words, when a country's main index weights are raised, it is easy to attract foreign attention, so that international capital inflows, the relative share price is prone to rise.。

For individual stocks, if individual stocks are included in the index or removed from the index components, usually the volume and price of individual stocks are prone to sharp fluctuations.。

That is, stocks that are included in the index tend to attract buying in the short term; conversely, stocks that are removed from the index are also prone to selling pressure, but it is not certain whether they will necessarily rise or fall。However, there will also be investors in the market who will forecast the stocks that may be included in the market first, lay out the results before MSCI announces the adjustment, and make a wave of profits if judged correctly.。

MSCI Market Classification

The MSCI market classification can be divided into:

• Developed Markets
• Emerging Markets
• Frontier Markets

Market Classification Basis

The MSCI market classification is adjusted annually and consists of the following criteria.

• Economic development: Considering the sustainability of economic development, it is only used to determine the classification of developed markets, because emerging markets and frontier markets have a wide range of development levels。
• Size and Liquidity: MSCI Global Standard Index Minimum Investable Requirements。
• Market accessibility: reflects the investment experience of international institutional investors in specific markets, including five criteria: openness to foreign ownership, ease of access to capital, efficiency of operating frameworks, availability of investment vehicles, and stability of institutional frameworks

MSCI Regional Index Related to Taiwan

MSCI has three main regional indices related to Taiwan.

• MSCI Emerging Markets Index
• MSCI Emerging Markets Asia Index
• MSCI Asia Pacific Ex Japan Index (USD)

In November 2021, the latest weight adjustment "two down and one up," MSCI Global Emerging Markets and MSCI Asia except Japan, the two major index weights were reduced, the adjusted weight ratio of 14.12% and 16.16%, while the MSCI Global Markets Index edged up to 1.69%。