Taiwan distinguishes itself on the global stage with its robust semiconductor and ICT industry chains, attracting substantial investments from the United States and Europe, with a foreign market capitalization consistently hovering around 40%. Moreover, among the global trend toward passive investments, the TWSE has introduced ETFs focusing on the new economy and ESG to position with these market dynamics. With a growth rate surpassing the global average, the TWSE has managed to secure the third top spot in Asian ETF AUM.
Faced with relentless international capital competition, the TWSE remains dedicated to strengthening its market foundations while leveraging its core competencies. The TWSE has further implemented strategies to promote diversification, thus setting the stage for the future expansion of the capital market and fueling the accumulation of growth momentum.
Enhancing Global Competitiveness through Industry Diversification
Supported by government policies and the capital market, Taiwan's ICT industry has laid a solid foundation. As the nation ventures into new economic domains, the National Development Council has outlined Six Core Strategic Industries. In alignment with this, the TWSE launched the Taiwan Innovation Board (TIB) to promote funding channels. Since the previous year, we have actively sought external counsel and refined our regulations twice to enhance flexibility. This effort continued in July, with the addition of new industrial categories such as "Green Energy and Environmental Services" and "Digital and Cloud Services." Starting with TIB as a foundation and synergizing with the main board's strengths, TWSE seeks to use our hardware technology to nurture the software industry, fostering the next wave of industrial clustering in the capital market.
With the pandemic underscoring the significance of biotech and medicine, the TWSE introduced a plan in October to bolster the biotech industry by encouraging increased information disclosure as well as enhancing investor protection. The TWSE's industry diversification strategy aligns with government policies and demonstrates a commitment to a robust economy and a competitive capital market.
Expanding Global Influence by Diversifying Funding Sources
Over the past year, in collaboration with regulatory authorities, we have visited key foreign investment countries such as Japan, Singapore, and the USA, establishing a direct communication channel with major institutional investors. We have been closely studying global trends related to the T+1 settlement cycle and the potential upgrade by MSCI. By forming a task force to research and refine our approach, we aim to deepen international investors' engagement with Taiwan's capital market.
Next year, we plan to extend our reach to Europe, our second-largest source of foreign capital, and to explore new opportunities in the financial hubs of the Middle East. We look forward to Taiwan not only playing a pivotal role in the international supply chain but also enhancing our global influence through a diversified funding base.
Broadening Financial Inclusion through Diversified Investment Options
Building on the rapid growth of Taiwan's ETFs over the past decade, we have expanded the diversity of ETF themes to meet the ever-changing investment demand. Additionally, we have considered global trends and market feedback to explore new ETF types, including actively managed and multi-asset options.
Furthermore, the Executive Yuan has approved draft amendment of the Securities Investment Trust and Consulting Act. REITs will be issued on a dual-track system in which market participants can choose to issue them under trust or fund framework. Anticipated to attract increased funds into the real estate market due to a lower entry barrier and stable returns, we expect more REITs to emerge and enhance the diversity of investment targets for investors, thereby expanding the reach of financial services.
Our pursuit of diversification is crucial to ensuring the sustainability and resilience of the Taiwan capital market. As we broaden industry categories, explore diverse funding sources, and expand investment options, we rely on the devoted support of market participants and stakeholders. Embracing the sentiment embodied in our slogan, “Partners Today Tomorrow and Beyond,” the TWSE eagerly foresees your continued support, striving to extend our partnership into the future while navigating the evolving financial landscape.