Investors who are eying blue chips on Wall Street have been urged by the Taiwan Stock Exchange (TWSE) to invest in exchange traded funds (ETFs) that track the Dow Jones Industrial Average Index in the U.S. market.
The TWSE, which operates the local main board, said several ETFs listed on the local main board, such as the Cathay Dow Jones Industrial Average ETF Fund and the Cathay Dow Jones Industrial Average Daily Inversed ETF, issued by Cathay Securities Investment Trust Co. (CSIT), track the Dow Jones Industrial Average.
If investors to buy into these ETFs, they will able to follow closely a basket of 30 blue chips on Wall Street, such as Apple Inc., Walt Disney Co., Visa, Microsoft Corp., Coca Cola Co., Goldman Sachs, McDonald’s, Nike Inc., and 3M Co., the TWSE said.
Yu Jih-chieh (游日傑), manager of the Cathay Dow Jones Industrial Average ETF Fund, said the U.S. is the world’s largest economy and remains a dominant power, exerting tremendous influence on the global financial markets, including equities, bonds and currencies.
Given the optimism toward the U.S. equity market, investments in ETFs that track the Dow Jones Industrial Average will be a good strategy for investors here to tap the U.S. market and make a profit in a long term, Yu said.
He said that even if there are corrections on Wall Street in the short term, any retreat could provide investors with a good buying point to pick up these ETFs in Taiwan.
The U.S. has been showing signs of stronger economic fundamentals and its equity market is expected to continue to rise in the mid- to long-term, according to CSIT.
However, CSIT urged investors to remain alert to a possible interest rate hike cycle by the U.S. Federal Reserve and it cautioned that Wall Street could face volatility by the end of the year.
The market has been widely expecting a decision on an interest rate hike when the Fed holds its next policymaking meeting in December.
CSIT said that if Wall Street turns volatile, investors here should consider buying the Cathay Dow Jones Industrial Average Daily Inversed ETF, which bets on a market downtrend, in a bid to hedge risks and pave the way for profit.
According to the TWSE, as of the end of October, a total of 61 ETFs were listed on the main board, with total assets of NT$280 billion (US$8.81 billion), 40 percent higher than at the end of 2015.
Source: Focus Taiwan News Channel