Taiwan could see more international money flow into the market today as funds make last-minute adjustments to their portfolios before Morgan Stanley Capital International boosts the country's weighting on its indices, according to analysts. However, the impact on share prices is likely to be modest and short-term as the market remains plagued by a poor growth outlook. When MSCI announced on June 18 that it would go ahead and include Taiwan at full market weight in its index series in two steps starting on November 30, market watchers projected it would lead to tens of billions of dollars in additional investments and give the stock market an upward push. Since the announcement, however, Taiwan's main index has risen 8.79 per cent compared with 21.77 per cent for the MSCI Asia-Pacific ex-Japan index. In the year to date it is down 1.79 per cent, lagging all other regional markets except China and Thailand. 'From an investment perspective, it has been a huge disappointment as Taiwan has been consistently underperforming,' ABN Amro analyst Ben Rudd said. Foreign investors have been buying about US$5.5 billion worth of Taiwan stocks net since June with US$4.9 billion of fund inflows last month and this month alone. But a lot has come in small amounts at times when the stock market has been weak, and as a result has failed to provide much of a share-price kick At the end of trading today MSCI will lift Taiwan's so called 'limited investability factor' to 75 per cent from 55 per cent, which will boost the country's weighting in the MSCI Emerging Market Asia index to 14.08 per cent from 10.56 per cent, according to preliminary calculations by the index provider. On May 31 next year the limited investability factor will be removed altogether, allowing for the inclusion of Taiwan stocks at 100 per cent of their market value. The changes will affect Taiwan's weighting in all MSCI indexes. Investors who wish to keep their portfolio weightings unchanged following the index adjustments will have to buy a corresponding amount of stocks. Analysts said some active fund managers had, however, chosen to let their underweight positions increase as they anticipated the weak dollar and sluggish demand for technology products would put further pressure on the margins of Taiwanese companies. 'The growth has been sucked out of the market,' CLSA Taiwan research head Peter Sutton said. Even so, asset managers who passively track the MSCI index will need to match the changes. Most will do so near the actual time of change - that is today or tomorrow. Harald Van Der Linde, head of Taiwan equity research at UBS, noted that when South Africa had a similar re-weighting in 2001 there was a large amount of buying by tracker funds in the final three hours before the change. 'I wouldn't be surprised if we see the same thing in Taiwan [today] and that could have a big impact on the less liquid medium-sized companies,' he said. Mr Sutton projected that a further US$2 billion to US$3 billion may come in over the next week, meaning the total inflow in the past 51/2 months would not be too far off the earlier projected US$10 billion.