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Taiwan Stock Exchange Corporation Press Release 2021/01/05 Corporate Planning & Strategy Department

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Taiwan Stock Exchange Corporation Press Release 2021/01/05 Corporate Planning & Strategy Department Taiwan Stock Exchange Corporation Press Release 2021/01/05 Corporate Planning & Strategy Department Taiwan Stock Exchange 2020 Year-end Press Conference Good afternoon, everyone: Thank you all for participating in the Taiwan Stock Exchange (TWSE) 2020 Year-end Press Conference despite your busy schedule. I sincerely appreciate your prolonged support of and guidance on the company’s business. Meanwhile, I would like to take this opportunity to share the development of the stock exchange market over the past year and our future work plans. 1. Taiwan stocks have made historical achievements Last year (2020), the world was greatly affected by COVID-19. With the success of the pandemic prevention in Taiwan, listed companies have demonstrated their perseverance and resilience, and the overall economic growth reached 2.54%. In light of the accomplishments, Taiwan has won the honor to be one of the few growing economies in 2020 by the Economist report. Based on a solid economic foundation, the Taiwanese stock market has made a number of historical achievements. The TWSE Capitalization Weighted Stock Index closed at 14,732.53 points as of the end of 2020, an increase of 22.8% from the end of 2019. The market capitalization of listed companies reached NT$44.9 trillion, and the total trading value for the year was NT$49.2 trillion, with the average daily trading value exceeding NT$200 billion for the first time. With high stock market liquidity, the profits of securities firms jumped to NT$49.8 billion in the first 11 months of 2020, and securities transaction taxes reached NT$130.8 billion (estimated to be around NT$147 billion for the entire year), enabling the public to share the economic prosperity. Table 1. Overview of Taiwan Stock Exchange Market 2020 2019 2018 2017 2016 2015 Closing Index 14,732.53 11,997.14 9,727.41 10,642.86 9,253.50 8,338.06 Total Market Capitalization (trillion 24.5 44.9 36.4 29.3 31.8 27.2 NTD) Total Trading Value (trillion NTD) 49.2 29.1 32.2 25.8 18.9 22.5 Average Daily Trading Value (100 922.3 2,007.5 1,200.7 1,302.1 1,048.7 775.2 million NTD) Turnover Ratio of Trading Value 77.6 123.3 80.4 92.6 78.4 64.6 (%) P/E Ratio 22.4 19.6 12.7 15.7 16.5 13.5 Dividend Yield (%) 3.0 3.8 4.8 4.0 4.4 4.6 Securities Firms' Net Income After (January- 40.73 29.49 39.70 19.37 26.02 Tax (billion NTD) November) 49.84 2020 2019 2018 2017 2016 2015 (January- 82.0 Securities Transaction Tax (billion November) 101.2 91.2 90.0 70.9 NTD) 130.8 2. The implementation of two important trading rules have achieved remarkable results Although most of the global stock market was severely affected by the pandemic in March 2020, a continuous trading system that had been studied and discussed for nearly 10 years was still implemented as planned. Fortunately, it was successfully launched on March 23, 2020 and operated stably with adequate preparation and comprehensive supporting measures. Since the implementation, the trading efficiency has been greatly improved, the number of placing orders increased by nearly 50%, and the trading value and the amount of shares traded have increased by more than 80%, which has greatly contributed to the increase of the price and volume of Taiwan's stock market. Table 2. Changes in Trading Before and After Implementation of Continuous Trading System (Monthly Average Excluding Warrants) Number of Number of 1,000- Number of 1,000- Trading Value Period Orders (10 share Lot in Order share Lot Traded (100 million thousand) (million) (million) NTD) Before January 2019 to 23,589 6,461 2,126 107 Implementation February 2020 After April 2020 to 42,487 9,652 3,489 196 Implementation December 2020 Change Rate (%) 49 64 84 80 Since the implementation of intraday odd lot trading on October 26, 2020, it has become significantly more active than after-hours trading. The trading value is more than three times as much as in the past, and the number of trading accounts have also increased from 218,000 to 616,000-- age group of 21-30- year-old increased the most significantly by 3.1-fold, indicating the new measure is welcomed among young people. The majority of the investment in stocks was concentrated on high-priced and financial stocks, which also led to a sharp increase in the number of shareholders for each company in this regard. Take TSMC, which ranked first in terms of trading volume and value, as an example, the number of its shareholders increased from 455,000 at the beginning of the year to 611,000 as of the end of 2020; Largan at the second place in trading value witnessed an increase from 14,000 to 48,000 in the number of its shareholders. The significant change of shareholder structure also applied to the financial industry. Table 3. The Number of Natural Persons with Trading Accounts in Each Age Group Before and After Implementation of Intraday Odd Lot Trading Growth Rate Age Group Before Implementation After Implementation 2019 (Monthly Average) November 2020 (%) Total Accounts 217,812 615,776 183 20 or under 8,748 22,959 162 21–30 27,746 114,932 314 31–40 49,083 150,421 206 41–50 54,009 147,517 173 51-60 40,238 101,263 152 61 or above 37,988 78,684 107 Table 4. Intraday Odd Lot Trading Volume (from October 26, 2020 to December 29, 2020) Average Number of Shareholders in Daily Daily 2020 (thousand persons) Name of Average Trading Rankings Beginning Beginning Company (thousand Volume of Year of Year NTD) (thousand shares) No. 1 in both trading TSMC 229,088 455 455 472 volume and value No. 2 in trading value Largan 80,849 24 14 14 No. 5 in trading E.SUN 3,109 344 344 123 volume FHC No. 10 in trading First 1,375 391 391 volume Financial 66 Holding Total Intraday Odd Lot Trading 665,411 5,712 3. Listed companies demonstrated a high degree of resilience Under the impact of the pandemic, listed companies have demonstrated their perseverance and actively adjusted production capacity and sales channels to turn this crisis into business opportunities. Therefore, last year's revenue will be maintained at the level of NT$32 trillion or above (NT$29.7 trillion for the first 11 months). Additionally, the pre-tax net income in the first three quarters grew by 8.1% against the trend, of which domestic listed companies grew by 8.5%, while foreign listed companies were obviously affected and declined by 5.6%. Table 5. Profitability of Listed Companies 2020 2019 2018 2017 2016 2015 Operating Income (January- (trillion NTD) November) 32.72 32.95 30.56 28.51 28.63 29.69 Pre-tax Net (Q1-Q3) Income (trillion 2.38 2.62 2.65 2.27 2.21 2.00 NTD) Net Income After (Q1-Q3) 1.86 2.06 2.09 1.79 1.74 Tax (trillion NTD) 1.57 To observe the revenue and profitability of individual industry, it is clearly found that they are highly correlated with the rise of stock prices. The electronics- related industries, main dominance of Taiwan’s capital market, accounted for around 66% of the entire listed companies' revenues. With a strong potential of a positive growth of their revenues and profits of 2020, the performance of stock prices were relatively excellent. In particular, the semiconductor industry had 20% growth in revenue, profit increased by as high as 60%, and the stock prices rose by more than 60%, contributing to the outstanding performance in the overall electronics industry. The profits of the industries, including computers and peripheral equipment as well as electronic products distribution, increased by 20% and the stock prices also rose significantly. This has indicated the resilient fundamentals of listed companies played an important role as a strong backing of the stock prices. The current dividend yield of Taiwan’s capital market is 3%, which is still at the top of the world's major securities markets. Table 6. The Performance of Industries with Growing Profits Q1-Q3 2020 Index Return Jan. To Nov. in 2020 Net Income After Tax in 2020 Operating Revenues Amount Change Rate Amount Change Rate Rise/Fall (%) (billion NTD) (%) (billion NTD) (%) Semiconductor 2,869.6 22.1 500.5 61.0 62.7 Computers and Peripheral 6,236.7 4.8 117.7 42.0 Equipment 22.9 Electronic Products 1,722.1 8.9 22.8 24.6 Distribution 22.9 Electronic 1,552.6 3.2 95.7 13.1 Parts/Components 32.8 Communications and 767.5 -0.0 42.1 4.5 Internet 4.7 Electrical and Cable 177.2 -11.5 9.7 84.1 33.7 Biotechnology and Medical 123.3 10.1 5.8 26.2 Care 4.8 Shipping and 727.8 -15.2 16.0 9.2 Transportation 58.4 Financial and Insurance 2,714.7 0.1 359.2 0.1 -1.2 4. Younger and sharply increased number of investors The outstanding performance of the capital market has attracted investors to participate more actively. Last year, the number of new accounts opened reached 670,000, contributed the total number of stock accounts to 11.24 million, accounting for 47.3% of the total population. It indicated one out of every two Taiwanese citizens engaged in stock market investment on average, bringing the number of stock investors to a record high of 4.38 million.
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