TAIFEX’s New Mini-Electronics Futures Attract Tech-savvy Investors


As large-scale vaccination and easing restrictions in many countries signal post-pandemic recovery, the severity of the global flea shortage has increased a notch.

Often considered the brains of modern electronics, semiconductors are used everywhere from computers and automobiles to game consoles; thus, the impact of a critical shortage of such important electronic components continued to trickle down the entire technology supply chain. Along with other developing trends such as the rapid adoption of e-commerce and digital commerce, the importance of the tech sector is further highlighted as tech stocks rally with the growing demand for goods and services.

Tech stocks on the Taiwan stock market, home of the world’s largest tech companies, have proliferated as a result. Taiwan’s tech companies – which in many cases are the leading makers of critical electronics – have seen their stock valuations double or even triple, on strong prospects for continued earnings growth.

A more accessible Contract to cover a critical global supply chain

For market players looking to invest in such a globally critical supply chain as Taiwan, having a cost effective and versatile way to manage their positions is imperative. As the pandemic disrupts seasonal effects, sales and price volatility in the country’s electronics industry continues to increase throughout the year, boosting trading opportunities and demand for coverage. The threshold for trading existing benchmarks or equity futures, due to the surge in stock prices, is also increasing.

To this end, the Taiwan Futures Exchange (TAIFEX) previously changed the listing criteria for its Mini Single Stock Futures (SSF) by lowering the price threshold for eligible stocks, introducing a wider range of SSFs such as Mini SSF on TSMC. . Moving forward on this path, the Exchange is dedicated to introducing a new, well-sized index product so that investors can flexibly hedge their exposure.

On June 28, TAIFEX launched Mini Electronics Sector Futures (ticker: ZEF) to meet growing demand from retail investors for exposure to Taiwan’s electronics sector. With a contract value of around $ 15,000, ZEF is one-eighth the size of the popular Electronics Sector Index Futures (ticker: TE), whose contract value has more than doubled since its inception. Both contracts track Taiwan’s electronics index, which covers 70% of the country’s stock market value, including major manufacturers of semiconductors, optoelectronics, and electronic parts / components such as TSMC, Mediatek, and Hon Hai Precision. (Foxconn).

With abundant liquidity and steady growth, ZEF has traded approximately 3,900 contracts daily since inception, in line with the increased need for smaller products seen in the Taiwanese market. A growing number of open interests for ZEF indicates not only the active participation of hedgers and traders, but also the success of the product in meeting market demand. Such demand can also be seen in the Mini-TAIEX futures contracts (ticker: MTX), TAIFEX’s first mini-contract, which overtook the larger TAIEX futures contracts (ticker: TX) to become the product. TAIFEX’s most traded futures in 2020 and on average more than 327 thousand contracts traded daily in the first half of 2021.

In addition to lowering the trade barrier for Taiwan’s globally critical electronics sector, ZEF’s reduced contract size facilitates a wider range of trading strategies, providing greater flexibility and portfolio allocations. more diverse.

TAIFEX on track for another record commercial year and more mini-contracts

2021 should be another active year for TAIFEX. In June 2021, TAIFEX recorded an average daily volume (ADV) of 1.53 million contracts, an increase of 21.1% year-on-year. Year-to-date, total ADV has grown 19.6% year-on-year, trading a total of 208 million contracts in the first half of 2021.

In particular, trading in Mini-TAIFEX futures grew 20.5% year-on-year in the first half of 2021, implying the strength of mini-contracts on the Exchange. By joining the Exchange’s small-scale product offerings, the prospect of TAIFEX’s electronics sector mini futures looks promising, and the launch also signals the potential for new mini-contracts to come.

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