Global Investors Seek Alpha in Taiwan’s Mid-Caps: Growth, Integrity, and Capital Allocation Are Key
Updated: 3 days ago
The 2026 Taiwan FINI 100 Awards Ceremony and Investment Forum: SEEKING ALPHA IN TAIWAN was held on September 2. The second panel brought together representatives from international investment institutions and market research organizations to discuss how Taiwan’s mid-cap companies can translate business quality into investment appeal for global investors.
Representatives from Bloomberg Intelligence, Matthews Asia, and Fidelity International highlighted Taiwan’s growing importance as a market for global active fund managers seeking alpha, or excess returns, supported by AI-driven opportunities and a comprehensive technology supply chain.
TSMC Offers Market Exposure; Taiwan Mid-Caps Open New Opportunities for Alpha
Marvin Chen, Senior Asia Equity Strategist at Bloomberg Intelligence, noted that Taiwan’s increasingly important role in the AI supply chain has prompted global investors to increase their allocations to Taiwanese equities. However, the concentration of capital in large-cap stocks also means that active fund managers must look beyond those companies for additional sources of alpha.
TSMC illustrates this challenge. Given its substantial weighting, many international funds face portfolio constraints, including limits on exposure to a single stock. In this context, TSMC serves largely as a source of exposure to Taiwan’s market returns, or beta. The ability to identify winners among other technology stocks and across industries can therefore make a greater difference to a fund’s relative performance.
Tiffany Hsiao, Portfolio Manager at Matthews Asia, added that investing in Taiwan’s technology leaders had generated attractive returns in recent years. As AI technologies evolve rapidly, however, identifying opportunities for alpha will become increasingly important.
Revenue Growth and ROIC Are Key to Screening Mid-Caps
Tiffany explained that historical backtesting had identified two financial characteristics commonly found in companies that sustain long-term growth in market capitalization: strong revenue growth and a high return on invested capital (ROIC).
After this initial screening, she evaluates companies through the “3Ps”: People, Process, and Product.
People refers to the management team, ownership structure, and execution capabilities. Process focuses on whether the business model can scale. Product examines whether a company’s offerings solve important customer problems.
Tiffany emphasized that innovation is about continually solving problems, rather than simply launching new products. Taiwan’s engineering talent, comprehensive supply chain, and longstanding commitment to serving customers together form an important competitive advantage.
Integrity and Capital Allocation Are Key to Attracting Long-Term Investors
Tina Chang, Associate Director, Fidelity International, said concentrated ownership by a family or founder is not inherently a disadvantage. It can even support decision-making with a longer-term perspective.
What matters to international investors is whether controlling shareholders and management consider the interests of all shareholders, and whether the board provides effective oversight.
When assessing mid-cap companies, analysts place particular importance on management integrity. Confidence in a company’s reported figures, stated strategy, and commitments is a prerequisite for investors to consider researching it further.
Investor Relations, Internationalization, and Governance Are Essential to Attracting Global Capital
The three panelists offered closely aligned views on how mid-cap companies can begin attracting global investors.
Marvin recommended establishing a comprehensive investor relations function to narrow the information gap between international and domestic investors.
Tiffany emphasized the importance of building investor confidence in both a company’s financial figures and its management.
Tina added that companies can encourage sustained investor interest and long-term investment by clearly explaining how capital is allocated, who is accountable for decisions, how mistakes are addressed, and how the board exercises oversight.
For Taiwan’s mid-cap companies, the next stage of competition extends beyond products and technology. It also depends on their ability to communicate a compelling investment case—one that global investors can understand and trust, giving them the confidence to remain shareholders over the long term.
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Ms. Li, Taiwan Institute of Directors (TWIOD)
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About the Taiwan Institute of Directors (TWIOD)
Founded in 2012 with the support of Taiwanese entrepreneurs and renowned scholars, the Taiwan Institute of Directors (TWIOD) serves as a think tank and strategic advisor for corporate boards. Its mission is to strengthen board effectiveness by addressing internal and external challenges and supporting both short- and long-term objectives, with a focus on global perspectives, family governance, corporate governance, and social responsibility.
By bringing together expertise from industry, government, and academia in Taiwan and internationally, TWIOD helps its members foster continuity across generations of business families and achieve sustainable business development, working to usher in a new era of prosperity for Taiwanese businesses.
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