Taiwan Innovation Board and Strategic New Board: Investment Opportunities and Risk Analysis in Emerging Markets

Taiwan officially launched the Innovation Zone and Strategic New Zone on July 20, 2021, aimed at supporting enterprises with innovative capabilities. These two newly established zones provide investors with a new way to access high-tech and innovative companies, while also bringing unique investment opportunities and challenges.

Positioning and Requirements of the Innovation Zone and Strategic New Zone

Innovative Zone is affiliated with the Taiwan Stock Exchange and primarily targets companies with key core technologies and innovative capabilities, such as those in the fields of IoT, artificial intelligence, big data, etc. The listing requirements include:

• The market capitalization is not less than NT$1 billion
• Possess significant innovative capabilities and technological advantages

Strategic New Zone is established in the Emerging Stock Market, targeting small and medium-sized innovative enterprises, with relatively low listing thresholds. Companies on the Strategic New Zone have the opportunity to transition to the Innovation Board for listing on the stock exchange after reaching a certain scale.

Current Overview of Listed Companies

As of now, four companies have successfully listed on the innovation zone:

1. Noxcrea Technology-KY (6854)
2. Hongde Energy (6873)
3. Cloud Leopard Energy (6869)
4. Yitian Cool Qi (2432)

The Strategic New Zone currently has 3 companies listed:

1. PinYuan (6963)
2. Universal Stem Cell (7607)
3. Yijun Huan Technology (6912)

It is worth noting that the Strategic New Zone originally had 21 companies, of which 18 have been converted to the Emerging Stock Market's General Zone.

Analysis of the Advantages and Disadvantages of Investing in the Innovation Zone and Strategic New Zone

Investment Advantages

1. Diversified Investment Portfolio: Provides investors with the opportunity to access emerging technologies and innovative companies, helping to diversify investment risks.
2. High Growth Potential: Innovative companies are often at the forefront of the industry, with high growth and market potential.

investment disadvantages

1. High Risk Characteristics: Innovative companies may face multiple challenges such as technological innovation and market competition, resulting in higher investment risks.
2. High market volatility: Stocks in emerging zones typically exhibit higher volatility, which may affect the stability of short-term returns.

Investment Threshold and Strategy

Investing in the Innovation Zone and Strategic New Zone requires meeting the “Qualified Investor” criteria, and general retail investors cannot participate directly. For eligible investors, the following strategies may be considered:

1. New Stock Subscription Strategy: Participate in the initial public offering phase to seize potential upward opportunities.
2. Choose Actively Traded Stocks: Pay attention to stocks with high trading volumes, such as Noxian Technology-KY (6854), to ensure sufficient liquidity.
3. Industry Analysis: In-depth study of the development prospects and market demand of the industries in which listed companies operate.
4. Financial Metrics Assessment: Analyze the company's price-to-earnings ratio (P/E), price-to-book ratio (P/B), and other key financial metrics to assess investment value.

For ordinary investors who cannot invest directly, it is advisable to consider investing in related ETFs such as the Nasdaq 100 Index to indirectly participate in the growth of innovative companies.

Market Outlook

Innovative enterprises represent the future direction of economic development. The Taiwanese government has demonstrated its supportive attitude towards innovative industries by establishing the Innovation zone and the Strategic New zone. This has injected new vitality into Taiwan's capital market and provided investors with access to high-growth potential enterprises.

However, investors need to fully recognize that the high returns in emerging markets often come with high risks. When considering participation in these zone investments, one should:

• Comprehensive assessment of one's own risk tolerance
• Conduct in-depth research on the target company's business model and financial condition
• Closely monitor changes in industry policies and market dynamics.

Through prudent investment decisions and risk management, investors can expect to achieve long-term stable investment returns while seizing innovative opportunities.