How to Invest in the Taiwan Stock Market

Founded in 1961 and active as a stock market since February 1962, the Taiwan Stock Exchange Corporation (TSEC) is permissive about the investment of foreign capital. Its key index is the Taiwan Capitalization Weighted Stock Index, which produces a daily average and tracks the performance of the companies traded on the Taiwan stock market.

Instructions

Difficulty: Moderate

Things You’ll Need:

• Financial adviser (recommended)
• Capital to invest
• Licensed stockbroker

1. Determine how much capital you want to invest in the Taiwan stock market. Ideally, you should work with a financial adviser to determine your threshold, but a general rule of thumb is to have at least 3 to 6 months' worth of living expenses covered in case you lose everything you invested.
2. Work with a well-established brokerage for the best access to the Taiwan stock market. Any buy or sell orders you place on Taiwanese stocks will have to be forwarded from your broker to a Taiwan-based broker with a license to fill them. The bigger brokerages have the most direct access to licensed Taiwanese professionals.
3. Deposit the start-up capital you want to invest into your brokerage account.
4. Watch the Taiwan stock market. Spend some time tracking market trends, learn what corporations are the country's heavy hitters and see how they've been faring in the past year or so.
5. Research the Taiwanese economy and its prominent industries. The manufacturing sector has typically been the lifeblood of Taiwan's economy, but shifts in global production patterns could change that.
6. Choose an industry with growth potential or a company that's performing particularly well in a sluggish industry. You may be able to snag a good deal on an undervalued stock.
7. Identify and research a company or list of companies you're potentially interested in investing in. Do the same as you would if you were buying a domestic stock: track the stock's historical performance, review the company's financial information and perform an analysis of the key indicators of a stock's future performance.
8. Place an order to buy shares of the company you choose to invest in through your brokerage. It will be filled by a Taiwan-based broker. Follow your investment's performance on a daily basis until you decide to sell.

Tips & Warnings

• Obtaining financial statements of foreign companies can be much more difficult than making the same request of domestic companies. Also, the financial statements you can acquire may not be available in English.