The highly anticipated “Yuanta Taiwan Value High Dividend ETF” (00940) in Taiwan was officially listed today, but it had a disappointing debut, with a closing price drop of 1.61% to NT$9.76, falling below the NT$10 issuance price. This has left 700,000 investors disappointed, especially those who borrowed money to invest in 00940, as they are now facing substantial losses.
Background:
The Financial Supervisory Commission (FSC) has set its sights on the ETF frenzy, prohibiting influencers and media from promoting it as a way to “beat fixed deposits.” Cryptocurrency advertisements will also face restrictions.
The “Yuanta Taiwan Value High Dividend ETF” (00940) launched by Yuanta Securities Investment Trust attracted significant attention before its listing. With its issuance price of NT$10 per share and monthly dividends, it raised a staggering NT$175.2 billion within just five days last month, breaking the record for the largest ETF listing in Taiwan. The number of beneficiaries exceeded 700,000, making it the fourth largest high dividend ETF.
However, 00940 had an unfavorable debut on its first day of listing. With a net asset value of NT$9.92 at the close last Friday, it opened at NT$9.93 today and continued to decline throughout the day, closing at NT$9.76, which is significantly lower than the NT$10 issuance price. Moreover, 00940 traded nearly 1.34 million shares, making it the most heavily traded stock on the Taiwan Stock Exchange today.
As 00940 closed with a significant decline, investors who purchased it at the issuance price of NT$10 are temporarily losing NT$240 per share.
Yuanta Securities Investment Trust had already announced the complete list of 50 component stocks for 00940 last Friday, revealing that it has invested 92.44% of the fund. With a lack of significant buying support from these component stocks, the top 10 component stocks of 00940 all performed poorly today.
EVA Air dropped NT$4.5 or 2.62%, Hon Hai Precision Industry dropped NT$5 or 0.44%, United Microelectronics Corporation dropped NT$0.5 or 0.96%, Taiwan Semiconductor Manufacturing Company dropped NT$6.5 or 3.03%, Pegatron Corporation dropped NT$4.5 or 4.41%, MediaTek Inc. dropped NT$35 or 2.93%, Realtek Semiconductor Corp. dropped NT$3 or 0.76%, GlobalWafers Co. dropped NT$17 or 2.93%, United Integrated Services Co. dropped NT$11 or 6.83%, and Novatek Microelectronics Corp. dropped NT$15 or 2.48%.
According to Liberty Times, industry insiders pointed out that the main reason for the net asset value of 00940 falling below the issuance price is related to its component stocks. Most of the component stocks are defensive assets, and with the Taiwan stock market at a high of 20,000 points, it is not easy for 00940 to surpass the issuance price. It is estimated that it will take some time for investors to break even.
Many investors in 00940 on the online forum PTT have been complaining, lamenting that they should have bought it after its listing. Some expressed their frustration with immediate losses, while others sarcastically asked if they should report their losses to the “Self-Help Association.” One investor even shared that his wife mortgaged their house to buy 00940 without informing him, resulting in a heated argument that led to the destruction of their belongings and a physical altercation. The investor has reported the incident to the police and is planning to get a divorce.
In response to the first-day drop in 00940, Huang Tianmu, chairman of the Financial Supervisory Commission, only stated that they respect market mechanisms. Regarding the ETF frenzy in the Taiwan stock market, the Financial Supervisory Commission has already conducted a project report and will focus on three aspects of regulation: ensuring complete information disclosure, selling to suitable investors, establishing marketing self-discipline regulations for investment trusts and influencers by the end of June, and establishing a market-wide risk monitoring mechanism with the Taiwan Stock Exchange and Taiwan Depository & Clearing Corporation.
As 00940 failed to meet expectations on its first day of listing, its performance has been compared to that of Bitcoin. According to previous statements by Yuanta Securities Investment Trust, from May 18, 2007, to December 31, 2023, the cumulative return rate of 00940, including dividends, is 732%, while Bitcoin has achieved an accumulated return rate of 21,357.97% since November 20, 2015, far surpassing 00940’s performance.
This has led some netizens to express that instead of buying 100 shares of 00940 and holding them for 10 years, it would be better to invest in Bitcoin, which has the potential to multiply over the same period.
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