Capability – not probability – is the key to smart investment

By: Edith Lee, CEO and Executive Director, Taipei Exchange Oct 2021

Individual investors are the backbone of the Taipei Exchange (TPEx), representing 75% of our equity trading turnover. TPEx has always placed great value on financial literacy and financial inclusion, recognising these as vital elements of our ongoing mission. In October 2021, TPEx is joining the “WFE Ring the Bell for Financial Literacy Campaign” for a third year, signalling our enduring commitment to this important initiative.

The OECD recommends that it is better to start financial education as early in life as possible. Financial literacy should be taught in schools because it has become a core life skill essential for participation in modern society. In a rapidly changing and increasingly complex environment, TPEx continues to provide comprehensive investor education programmes through various channels, to reach diverse investor groups.

In particular, youth education has been at the core of our strategy to build financial literacy for future generations, while our efforts assisting more experienced retail investors have focused on the themes of sustainability and ESG.

Education for new and young investors

TPEx recognises that the COVID-19 pandemic has placed financial literacy and inclusion more firmly on the centre-stage than ever before. During the pandemic, trading among young investors has increased substantially as a result of new trading initiatives, such as convenient intraday odd-lot trading, the adoption of mobile trading apps, and the proliferation of thematic stock indices, which have enabled the creation of related products such as ETFs, ETNs, warrants, and so on.

In response to the rapid growth in the number of highly enterprising and yet less experienced young investors, TPEx has long provided an ongoing series of financial education programmes designed to build financial planning skills and to enhance understanding of risk and return. These programmes are designed to focus on securities investment and related risks, with an emphasis on hands-on application of what is learned.

TPEx aims to equip young adults who are in the early stages of their exposure to securities trading with a better understanding of investment, and to provide them with the necessary skills to navigate the complexities of the market. Every year since 2008, we have hosted the “Securities Talent Camp” for domestic college students. Thousands of potential investors and future securities professionals have taken part.

The Securities Talent Camp is an iconic event for TPEx, offering free courses that bring real market practice together with team challenges and fun activities. These events have consistently attracted overwhelming interest from college campuses.

Because of the pandemic, the Camp was held online for the first time in 2020. In 2021, we saw record-breaking enrollment, with 222 teams representing a total of 956 students from 63 schools joining the online Camp. A record number of these participants went on to complete all the assignments. These assignments included:

(1) Completing 3 online courses, covering:

a. Features and principles of the capital market

b. Diverse financial products listed on TPEx

c. Financial planning, portfolio management and risk awareness

(2) Teams of between three and five students were required to construct a portfolio worth an equivalent NT$5 million, and then created an 8 to 12-minute video presentation, including:

a. Market and industry outlook, with supporting information

b. A selection of at least three TPEx-listed financial products, with an analysis of their characteristics and an explanation of their allocations in the portfolio

c. An analysis of expected return and the related risks of the portfolio

(3) Finally, TPEx graded each team according to the quality of their teamwork and on how well the students had understood the financial tools and the markets covered.

The top three teams were awarded prize money and certificates.

The ongoing success of the Securities Talent Camp, even as it has evolved into an entirely virtual course, demonstrates TPEx’s firm commitment to financial literacy at higher educational institutions in this “new-normal” era.

Additionally, to cater to the unique demands of remote learning, TPEx launched a new “TPEx HOME Classroom” website in August. This serves as a one-stop learning platform, offering useful toolkits and links to financial education courses, helping young investors to locate the educational resources they need with ease.

Education for retail investors

A key feature of the equity market at TPEx is the active participation of retail investors. We consider that fostering resilience in our retail investors is essential to securing market stability.

TPEx consistently disseminates securities knowledge to the investing public. A major part of this mission involves raising awareness of the risks associated with markets in general, as well as risks associated with various types of new products. Given the COVID-19 situation, it is more important than ever to warn the investing public of the dangers presented by investment scams, misleading disclosures and over-leveraging.

With the aim of facilitating rational investment behaviour and risk-based decision making among retail investors, TPEx has provided educational resources and promotional materials including:

  • A series of investor education seminars – So far in 2021, TPEx has held eight investor education seminars, in both physical and virtual formats. These have been provided in collaboration with several securities firms. More than 2,500 investors have joined these events to learn about new products, new trading rules and the economic outlook.
  • Investor conferences – With the aim of mitigating the information gap for retail investors and enhancing the transparency of listed companies, TPEx has held 25 investor conferences during the first three quarters in 2021. A total of 73 companies listed on the Main board and Emerging Stock Board have made public presentations on their operational and financial performance so far.
  • Press releases, TPEx monthly newsletters, news columns, and online promotions.
  • Social media, i.e. our Facebook page, and multimedia tools, such as slideshow presentations, videos and animated films.

Education on sustainability and ESG

TPEx has been working on promoting sustainability and ESG practices for years. It has raised awareness among market participants by implementing related rules and introducing ESG concept products.

Our goal is to embed sustainability into every aspect of market activity, from issuance and investment to valuation and reporting. To achieve this goal, TPEx has dedicated itself to education and advocacy for sustainability/ESG via several channels:

  • Sustainable Bond Market Website – TPEx successfully launched a new segment exclusively for green bonds, sustainability bonds and social bonds in May 2021. Accordingly, it has modernised the Sustainable Bond Market website, ensuring that all relevant information is transparent and accessible. The website is bilingual, with key features added, including information on the issuance status, market reports, and access to the latest studies from relevant international organisations.
  • TPEx Sustainability Website – The website includes TPEx’s ESG reporting, CSR and corporate governance materials, as well as news and current events related to sustainability.
  • TPEx ESG Webinar 2021 – This two-day online event was hosted by TPEx at the end of August, with more than 2,000 participants drawn from listed companies and institutional investors. The webinar brought together the supervisory authorities with experts in ESG and representatives from listed corporations to share their views and insights. It was a great opportunity to promote the development of ESG and to discuss ESG investment, in line with TPEx’s ongoing mission to construct a sustainability ecosystem.
  • Taipei Corporate Governance Forum – In September, TPEx jointly held the “13th Taipei Corporate Governance Forum” (TAICGOF), in conjunction with the Financial Supervisory Commission and the Taiwan Stock Exchange, to facilitate ESG development across Taiwan’s capital market. The keynote speech and panel discussions covered the latest issues and international trends in sustainability. Through discussion and sharing experiences, we hope to strengthen awareness of sustainability/ESG and to accelerate Taiwan’s sustainability transformation.