Foreign investors seeking mid-sized Taiwanese companies for Alpha: Three key factors – high growth, integrity, and capital allocation.
The "2026 Top 100 Foreign Investors in Taiwan Awards Ceremony and Foreign Investor Forum" will be held on September 2nd. The second session of the Foreign Investor Forum brought together international institutional investors and market research representatives to focus on how Taiwanese mid-sized enterprises can further evolve from high-quality companies into global investment targets.
Representatives from institutions including Bloomberg Intelligence, Matthews Asia, and Fidelity International pointed out that Taiwan, benefiting from AI and a complete technology supply chain, has become an important market for global active capital seeking excess returns (Alpha).
TSMC provides Beta, mid-sized enterprises become the new battleground for Alpha.
Marvin Chen, a senior analyst of Asian equity strategy at Bloomberg Intelligence, pointed out that Taiwan has benefited from its improved position in the AI supply chain in recent years, leading to increased global investor allocation to Taiwan stocks. However, the high concentration of funds in large-cap stocks also means that actively managed funds must look for new alpha.
Taking TSMC as an example, since its weighting is already quite high, many international funds are subject to risk control restrictions such as the single shareholding limit. TSMC is more like providing "Beta" to the Taiwan market. What can really differentiate fund performance is whether investors can pick out winners from other technology stocks and industries.
Tiffany Hsiao, portfolio manager at Mindshare Asia, also pointed out that in the past few years, investing in Taiwan's technology industry by "buying the leading companies" could yield good returns, but with the rapid evolution of new AI technologies, the importance of Alpha will continue to increase in the future.
When selecting mid-cap stocks, foreign investors should first look at revenue growth and ROIC.
Tiffany shared that through historical backtesting, they found that companies that can expand their market value in the long term usually have two financial characteristics: maintaining high revenue growth and maintaining a high return on invested capital (ROIC). After the initial screening, they further examined the "3P"—People, Process, and Product.
Among these, "People" focuses on the management team, shareholder structure, and execution capabilities; "Process" emphasizes the scalability of the business model; and "Product" must truly solve the customer's critical problems. She stressed that the purpose of innovation is not simply to launch new products, but to continuously solve problems. This is also a key competitive advantage formed by Taiwan's engineering talent, complete supply chain, and long-term customer service culture.
Integrity and capital allocation determine whether foreign investment can be held long-term.
Tina Chang, Vice President of Sustainable Investments at Fidelity International, believes that concentrated shareholding by family businesses or founders is not inherently a disadvantage and may even create a long-term decision-making advantage.
What foreign investors are truly concerned about is whether controlling shareholders and management incorporate the interests of all shareholders into their decision-making, and whether the board of directors can effectively fulfill its oversight function.
For mid-sized companies, analysts particularly value management's "integrity." Whether a company's figures, strategies, and promises can be trusted is a crucial threshold for investors to conduct further research.
Attracting international funding requires investment in international relations, internationalization, and governance – all are indispensable.
As for how medium-sized enterprises can take the first step in attracting global investment, the three international market representatives gave highly consistent answers. Marvin suggested that companies should first establish a complete IR (Information Relationship) mechanism to reduce the information gap between overseas and local investors.
Tiffany emphasized that it is most important to make investors "believe in the numbers and believe in management"; Tina believes that if companies can clearly explain how funds are used, who is responsible for decision-making, how to adjust for decision-making errors, and how the board of directors supervises, it will greatly increase the long-term tracking and investment willingness of international funds.
In other words, the next stage of competition for Taiwanese mid-sized enterprises will not only be about products and technology, but also about whether they can transform their corporate value into an investment story that global investors can understand and are willing to hold for the long term.
Press Contact:
Ms. Li from the Taiwan Board of Directors Association
02-27580889 #200 | 0970-395-328
About the Taiwan Board of Directors:
Founded in 2012 with the support of Taiwanese entrepreneurs and renowned scholars, the association positions itself as a think tank and advisory body for corporate boards of directors. Its goal is to comprehensively improve board operations, focusing on internal and external issues and short- and long-term objectives, including global perspectives, family governance, corporate governance, and social responsibility. By combining the strengths of industry, government, and academia both domestically and internationally, the association aims to assist its members in achieving family longevity and sustainable business development, helping Taiwanese businesses create the next golden generation. For more information, please visit the official website: https://twiod.org/ .
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