The highly anticipated “Yuanta Taiwan Value High Dividend ETF” (00940) in Taiwan was officially listed today, but unexpectedly had a weak debut, closing down 1.61% at NT$9.76, falling below the issue price of NT$10. This disappointment has left 700,000 investors disillusioned, especially those who borrowed money to purchase 00940, as they are now facing significant losses.
Background:
The Financial Supervisory Commission (FSC) is cracking down on the ETF frenzy! Influencers and media are prohibited from promoting “beating time deposits,” and cryptocurrency advertisements will also be restricted.
Article Contents:
Disastrous debut on the stock market
Investors lament
Response from the Financial Supervisory Commission
How does it compare to Bitcoin’s performance?
The “Yuanta Taiwan Value High Dividend ETF” (00940) launched by Yuanta Securities Investment Trust caused a market frenzy even before its listing. With its launch price of NT$10 per share and monthly dividends, it raised a staggering NT$175.2 billion in 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 a poor debut today. It opened at NT$9.93, slightly higher than the closing net asset value of NT$9.92 on Friday, but soon started to decline and closed at NT$9.76, down 0.16 or 1.61%, well below the issue price of NT$10. Furthermore, 00940 had a trading volume of nearly 1.34 million shares today, making it the most traded stock on the Taiwan Stock Exchange.
With the dismal closing price, investors who purchased at the issue price of NT$10 are temporarily losing NT$240 per share.
Source: Yahoo Finance
Chart of 00940’s 5-minute performance. Source: Yahoo Finance
Yuanta Securities Investment Trust had already published the complete list of the 50 constituent stocks of 00940 last Friday, revealing that 92.44% of the fund had been invested. With the absence of significant buying support from the constituent stocks, the top 10 constituent 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%, HannStar Display Corp. dropped NT$3 or 0.76%, GlobalWafers Co. dropped NT$17 or 2.93%, Advanced Semiconductor Engineering Inc. dropped NT$11 or 6.83%, and Novatek Microelectronics Corp. dropped NT$15 or 2.48%.
According to Liberty Times, some industry insiders stated that the main reason for the net asset value discount of 00940 was related to its constituent stocks. Most of the constituent stocks only have defensive characteristics, and with the Taiwan stock market at a high level of 20,000 points, breaking the issue price was not easy for 00940, and investors may have to wait for a while to recover their losses.
Many 00940 investors on the online forum PTT are lamenting, saying, “If only I had bought it after it was listed,” “I’m losing money as soon as I buy it,” “Did the self-help group report this?” “I made a lot of transactions but ended up losing NT$250,” “Never go where there are too many people.”
Furthermore, many people who borrowed money, including mortgages, to purchase 00940 are now facing dire consequences. A male netizen even claimed on the Facebook group “00940 Self-Help Group” that his wife, in the middle of cooking, informed him that she had mortgaged their house to buy 00940. This led to a heated argument, with him overturning the food and his wife smashing his computer. She even hit him with a brick, causing him to bleed. He has reported the incident to the police and is preparing for a divorce.
Regarding the net asset value discount on the first day of listing for 00940, Huang Tien-mu, the chairman of the Financial Supervisory Commission, simply stated that they respect market mechanisms. The FSC has previously conducted a special project report on the Taiwan Stock Exchange ETF frenzy and will focus on three aspects of supervision:
1. Whether information disclosure is complete.
2. Whether the product is sold to suitable investors.
3. Establishing a market-wide risk monitoring mechanism with the Taiwan Stock Exchange and Taiwan Depository & Clearing Corporation.
As 00940 broke its issue price, its performance is now being compared to Bitcoin. According to Yuanta Securities Investment Trust’s previous explanation, from May 18, 2007, to December 31, 2023, the cumulative return of 00940 with dividends included is 732%. In contrast, Bitcoin has achieved a cumulative return of 21,357.97% since November 20, 2015, far surpassing 00940’s performance.
This has led some netizens to express that instead of buying and holding 100 shares of 00940 for 10 years, it would be better to invest in Bitcoin, which could potentially multiply their returns.
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