Master the MSCI constituent stock list query to unlock international investment opportunities in Taiwanese stocks

Why Are Investors Paying Attention to MSCI Adjustments?

Every February, May, August, and November, the global financial markets experience waves of volatility—this is the regular review period for MSCI indices. During these adjustment windows, institutional investors tracking MSCI indices synchronize their holdings, often causing significant stock price swings of over 3% on the effective date.

This is no coincidence. Over 2,000 global institutional investors use MSCI indices as their investment benchmarks, with thousands of ETFs closely tracking their movements. When a stock is added to or removed from the MSCI system, it is often accompanied by large-scale capital inflows or outflows. For Taiwanese investors, understanding how to query MSCI constituent lists and grasping the adjustment cycle have become essential investment skills.

What Exactly Is MSCI? How Does It Shape Global Financial Markets

MSCI (Morgan Stanley Capital International) originated from Morgan Stanley’s index compilation division established in 1969. It was spun off as an independent company in 1998 and listed on the NYSE in 2007 under the ticker MSCI.US. Today, “MSCI” mainly refers to the company’s series of international equity indices.

Unlike indices compiled by local exchanges (such as Taiwan’s Weighted Index, which covers all listed companies), MSCI indices are more selective—they use rigorous criteria based on market capitalization, liquidity, trading volume, and other factors, employing scientific methods to select representative, high-quality stocks. This makes MSCI indices a vital window for assessing international capital’s view of market quality.

While other index providers like FTSE Russell (UK) and S&P Dow Jones (US) exist, MSCI’s global influence is the most extensive. When a company or market is included in MSCI, it is called “inclusion,” which often attracts passive funds, providing a positive boost to stock prices.

It’s also worth noting that there is a commercial bank called “J.P. Morgan” (commonly called “Little Morgan”), which can be confused with MSCI. Morgan Stanley was originally the investment division of J.P. Morgan but became independent during the Great Depression in 1930 and later grew into a larger investment management firm. They are fundamentally different—Morgan Stanley focuses on investment management, while J.P. Morgan is primarily a commercial bank.

How Is Taiwan Included in the MSCI System? Market Classification Explained

According to MSCI’s latest classification standards for 2025, global stock markets are divided into four main categories:

• Developed Markets: Economically advanced, mature financial markets, political stability, transparent regulation
• Emerging Markets: Rapid economic growth, increasing market openness, relatively higher volatility
• Frontier Markets: Smaller market size, limited liquidity, but with growth potential
• Standalone Markets: Markets listed separately due to capital controls, political risks, or other special factors

Taiwan is classified as an emerging market, closely linked to the MSCI Emerging Markets Index. Morgan Stanley has included Taiwan in the MSCI system since 1996, gradually increasing its inclusion proportion. Currently, Taiwanese stocks are also part of the MSCI Asia ex-Japan Index, MSCI All Country Asia ex-Japan Index, MSCI World Small Cap Index, and other classifications.

By 2025, MSCI manages over 160,000 stock indices covering various regions, market types, and industry themes, widely used in ETF design, fund performance evaluation, and portfolio allocation.

Composition and Weight Distribution of the MSCI Taiwan Index

The MSCI Taiwan Index includes 88 listed companies, weighted by market capitalization and business scale to reflect the overall trend of the Taiwan stock market. TSMC accounts for over 50% of the index weight, making it the dominant constituent, followed by other major financial and electronics stocks.

This weighting approach reflects MSCI’s core selection logic—prioritizing companies with large asset sizes, stable performance, and high international recognition. For investors seeking stable returns, directly investing in the top-weighted MSCI constituents often means lower volatility, higher dividend yields, and better long-term value.

MSCI Quarterly Adjustment Mechanism: Schedule, Process, and Arbitrage Opportunities

Adjustment Schedule

Morgan Stanley conducts regular index reviews in February, May, August, and November each year. The results are usually announced about 10 working days in advance on their official website, with the effective date set after the announcement. Adjustments become official after the market close on that date.

Adjustment Process Details

Index adjustments involve three key changes:

1. Adding stocks that meet the inclusion criteria to the index
2. Removing stocks that no longer meet the criteria
3. Adjusting the weights of constituent stocks based on market cap, stock price, and other factors

For example, in August 2023, MSCI’s Global Small Cap Index added 17 Taiwanese stocks, including companies like Advanced Optical, Shenghui, Ambassador, Cathay Re, and Qiao Wei.

Market Volatility from Adjustments

Since many funds track MSCI indices, they must rebalance their holdings on the effective date. This often results in increased trading volume and stock price swings at market close. Newly added or removed stocks can experience over 3% price movements on that day.

However, because these swings are driven by institutional rebalancing rather than fundamental changes, prices tend to revert to normal within the same day or the next. The market has usually already priced in these adjustments about 10 working days in advance. The volume spike on the adjustment day is mainly due to capital reallocation, and the short-term gains or losses are often quickly offset. Long-term investors need not worry excessively.

How to Query MSCI Constituents

Investors can directly check the adjustment list on Morgan Stanley’s official website. For those less comfortable with manual searches, financial news platforms like Google Finance and Yahoo Finance update MSCI constituent information promptly. Regularly monitoring these sources helps investors stay informed about the latest MSCI composition.

The Deeper Significance of Inclusion in the MSCI System

When a market is included in MSCI indices, it signifies international capital’s formal recognition. This leads to:

• Accelerated capital inflows: Passive funds tracking MSCI increase their holdings, injecting additional funds
• Rising foreign ownership: Overseas investors’ share gradually increases, deepening market internationalization
• Evolution of trading styles: Shift from short-term speculation to long-term holding, making trading more rational
• Enhanced market linkage: Increased correlation with neighboring markets

Taiwan’s inclusion in MSCI has lasted over 25 years, and its internationalization is well established. The scale and magnitude of constituent adjustments have become more stable. Instead of expecting huge market rallies from MSCI changes, it’s better to view them as one of many rational analytical tools—combining fundamental analysis, technical trends, and capital flows to build a comprehensive investment framework.

Whether it’s regularly checking MSCI constituent lists, tracking quarterly adjustments, or directly investing in related derivatives, the key is to use MSCI as a tool to better understand global capital flows and Taiwan’s position in the international market.