Taiwan’s capital market has demonstrated remarkable resilience in recent years, with its total market capitalization ranking 5th globally and attracting growing international attention. Companies listed in Taiwan have traditionally attracted investors with their earnings growth potential, dividend yields, in conjunction with relatively stable exchange rates and market liquidity. Together with Taiwan’s internationally recognized standards of corporate governance alongside ESG disclosure, these strengths have made Taiwan’s stock market an attractive destination for international investors.
In recent years, however, Japan and South Korea have stepped up efforts to enhance corporate value, introducing policy initiatives to encourage listed companies to respond more proactively to international investors’ expectations regarding business performance and disclosure practices.
For example, the Tokyo Stock Exchange (TSE) has introduced initiatives such as the “Action to Implement Management that is Conscious of Cost of Capital and Stock Price”, measures to enhance shareholder dialogue and related disclosure, along with guidance on the appropriate use of explanations to promote constructive dialogue. Over the past three years, these initiatives have successfully reduced the proportion of companies listed on the TSE Prime Market with a price-to-book ratio (PBR) below 1.0 time (1.0x) from 50% to 26%.
In 2024, the Taiwan Stock Exchange (TWSE) introduced the Power Up Plan, an initiative designed to help listed companies demonstrate their business performance and corporate value while pursuing both profitability as well as sustainability. The plan embodies the “Double E” principle: EPS (earnings per share) × ESG (environmental, social, and governance).
More recently, the TWSE launched the Power Up Plan 2.0 to further strengthen companies’ ability to articulate their corporate value and long-term vision. One particularly significant development is that the initiative has prioritized large companies with a certain market capitalization combined with more mature corporate governance to disclose medium- and long-term forecast information. This represents a major step forward. Moreover, companies with market capitalizations below US$2 billion are often classified as small- or mid-cap companies in international markets. Supporting Taiwan’s promising companies attract greater investor attention has therefore become increasingly important.
I. The Buy-Side Perspective: How Capital Market Valuations Are Changing and How Companies Should Respond
The Taiwan Index Plus Corporation (TIP) IR Engage Platform provides a one-stop platform for connecting investors with listed companies. With practical features and a bilingual Chinese-English interface, the platform has the potential to become a model for similar initiatives across Asia. Its services include facilitating investor conferences in tandem with IR engagement, enabling cross-company analysis of financial performance and stock prices, as well as allowing companies to upload Corporate Value Enhancement Plans.
These functions help institutional investors evaluate companies based on their fundamentals, valuations, and ESG performance. By making effective use of the platform, companies can enhance their corporate visibility and cultivate long-term relationships with investors.
The Importance of Forward-Looking, In-Depth Communication
Relying primarily on quarterly earnings reports or monthly revenue announcements can lead companies and investors to focus excessively on short-term performance. Likewise, holding more investor conferences does not necessarily translate into more effective IR engagement.
Investors are more interested in a company’s business outlook, capital allocation, and resource allocation. Meaningful, in-depth dialogue on these topics is far more valuable than one-way presentations that merely recite financial figures.
A Company-Wide Review of Capital Efficiency
Stewardship has become standard practice among institutional investors. In addition to reviewing the capital allocation efficiency and return on equity (ROE), boards of directors coupled with senior management must pay close attention to material issues relating to ESG, climate action, and human rights.
II. A Vision for Making the Power Up Plan Asia’s Most Distinctive Corporate Value Communication Platform
Building a Trustworthy Environment for Forecast Information Disclosure
In the past, a small number of companies made inappropriate use of overly optimistic forecast information, triggering stock price volatility. As market regulations became more stringent, many listed companies became more cautious and reluctant to disclose forecast information.
As competition among neighboring markets intensifies, Taiwan can draw on the practical experiences of companies participating in this new wave of forecast information disclosure to progressively refine its disclosure guidelines together with supporting measures.
Over time, companies with above-average ESG performance should be encouraged to disclose forecast information appropriately, based on reasonable business assumptions and accompanied by appropriate cautionary statements. This would help investors better understand corporate value while preserving market integrity plus investor confidence.
Strengthening Investor Communication for Small- and Mid-Cap Listed Companies
Many companies operating in niche markets possess strong technological capabilities and competitive advantages yet remain overlooked because they lack the resources in addition to experience to manage investor relations effectively.
Targeted investor relations advisory services and thematic IR matchmaking initiatives could help these companies improve disclosure alongside investor communication. Such support would help international institutional investors identify promising Taiwanese small- and mid-cap companies to better recognize their underlying potential.
Global capital markets are shifting away from a focus on short-term earnings growth toward a more comprehensive assessment of long-term strategic resilience in tandem with capital allocation efficiency.
The Power Up Plan represents a critical opportunity to reshape how corporate value is communicated and assessed over the medium to long term.
We look forward to seeing more Taiwan-listed companies translate their potential into recognized corporate value to earn the sustained investor recognition and fair valuations they deserve.