Taiwan is unique among emerging markets in the sense that technology forms the backbone of its economy. With the possible exception of South Korea (EWY, quote) and its world-beater chaebol Samsung, no emerging market benefits from the smartphone revolution and as much and in as many different ways as Taiwan.
Taiwanese companies represent disparate segments of the value chain and elements of the supply chain. HonHai Precision Industries, better known globally as Foxconn, is responsible for the assembly of myriad smartphones and tablets, including Apple (AAPL, quote) iPhones and iPads; Mediatek and Taiwan Semiconductor (TSM, quote) supply chip components for smartphones; HTC manufactures sleek, state-of-the-art smartphones and tablets.
With the exception of Taiwan Semi, the other Taiwan-based companies listed above don’t trade on U.S. exchanges. However, investors can still gain exposure to a basket of Taiwanese technology firms through the iShares MSCI Taiwan Index ETF. The EWT has a 56% weighting to the tech sector. As a result, the ETF is often employed a tech proxy.
For investors looking to jump in, the EWT is in somewhat of a no-man’s land. It’s down roughly 10% from its highs last year, but up 15% from its late-fall lows. Technically, EWT is still trading above its 50, 100, and 200-day moving averages, but a recent bearish crossover of the 50 and 200 day could see the stock move further down.
Traders should watch for EWT’s reaction at the 13.17-13.25 level, where the 200 and 50-day moving averages are located, respectively. Strong support here could see the EWT move higher; conversely, a failure to hold these levels could see this ETF test its 100-day moving average around 12.67.
EWT traded down .45% on Monday to 13.37.