In-depth analysis of heavyweight stocks meaning: the investment logic of the market indicator and the must-watch rankings for 2025

Many stock market beginners often hear the term “weighting stocks” on financial programs but know little about its true meaning and investment value. What exactly are weighting stocks? Why do they become the market’s focus? This article will analyze this core concept from three perspectives: market mechanisms, practical data, and investment strategies.

Meaning of weighting stocks: concrete expression of market weight

The core definition of weighting stocks lies in their relative position in the stock market. Simply put, weighting stocks refer to those listed companies with high market capitalization proportions and market influence. When these stocks fluctuate, they directly impact the rise and fall of the entire index.

Taking the Taiwan Weighted Stock Index as an example, this index is calculated by weighting all listed companies according to their market value. Under this framework, larger-cap stocks naturally become weighting stocks. Specifically, TSMC’s weight exceeds 30% in the Taiwan market, meaning a 1 yuan increase in TSMC can push the index up by about 8 points, while many small- and medium-sized stocks have little to no effect on the overall market. In this sense, weighting stocks have become the “weather vane” of the market, with their performance directly indicating the market direction.

Why are weighting stocks worth paying attention to? Core investment logic

Investors favor weighting stocks not only because of their large scale but also because they often possess the following investment characteristics:

Robust fundamentals and solid management: Most weighting stocks are industry leaders or large enterprises, such as TSMC’s dominant position in wafer foundry, and Hon Hai’s market share in electronics manufacturing. These companies tend to have stable financial conditions and continuous profitability.

Abundant cash flow and regular dividends: Many weighting stocks maintain stable dividend policies over the long term, providing reliable long-term investment targets for investors seeking cash flow income. For example, Chunghwa Telecom’s average dividend yield remains around 4-5%, with almost no interruption in dividend payments over the years.

Relatively mild volatility and strong anti-drop ability: Because market funds and institutional investors (such as investment trusts and foreign investors) continuously hold these stocks, their prices tend to fluctuate less than small- and medium-sized stocks, making them suitable for investors with limited risk tolerance.

Market indicator function: The rise and fall of weighting stocks often reflect the overall market trend in advance, providing important reference value for technical analysis and capital flow judgment.

Panorama of the top 20 weighting stocks in Taiwan’s stock market in 2025

Examining the current structure of the Taiwan stock market, it is evident that the distribution of industries among weighting stocks is highly related to market topics:

(As of October 16, 2025, source: CMoney)

Notably, TSMC’s dominance remains unchanged, with its market value far exceeding other stocks, highlighting the core position of the tech industry in Taiwan stocks. Financial, foundry, and electronics stocks form the second tier.

The landscape of US market weighting stocks: a global capital allocation guide

In the US S&P 500 index, the concept of weighting stocks also applies, with even larger scale. Here is the ranking of the top 10 weighting stocks in the US market as of 2025:

(As of September 30, 2025)

Compared to the single-dominant phenomenon in Taiwan stocks, US weighting stocks show a more diversified structure, with technology stocks (NVIDIA, Microsoft, Apple), fintech (Meta), e-commerce (Amazon), and others reflecting the multi-layered development of the global economy.

The actual role of weighting stocks in the market: stability and guidance

Market stabilizer role: Due to their large market value, fluctuations in weighting stocks have a profound impact on the overall index. When the market is volatile, government rescue measures often focus on boosting weighting stocks to lift the index, restoring investor confidence and triggering retail follow-up, ultimately achieving market stabilization.

Market cooling tool: Conversely, when the market overheats, a decline in weighting stocks can effectively reduce market temperature. Since most investors tend to observe the index’s daily movement before trading decisions, weighting stocks can easily become the “direction setter.”

Taiwan’s weighting stocks detailed analysis

TSMC (2330): The absolute king of the tech industry

TSMC is the undisputed leader in global wafer foundry, with a market share consistently above 50%, far surpassing second-place Samsung and UMC. It possesses the world’s most advanced process technology (already in mass production of 3nm, with 2nm expected to start in 2026), serving as the core supplier for tech giants like Apple, NVIDIA, and AMD.

In the Taiwan weighted index, TSMC’s weight exceeds 30%, making it the largest variable influencing the market’s rise and fall. Its investment appeal lies in its deep technological moat and stable long-term growth. Although its stock price base is high, it is still regarded by the market as a “long-term must-hold.”

Hon Hai (2317): The transformation story of the global foundry leader

Hon Hai Precision is the world’s largest electronics OEM, with over one million employees, manufacturing products for globally renowned brands such as Apple iPhone, Tesla vehicles, and Amazon. It is an indispensable part of the international supply chain.

In recent years, Hon Hai has actively transformed into an “integrated technology service group” by developing electric vehicles (MIH platform) and AI server businesses, while strengthening investments in semiconductors and energy. These initiatives have made Hon Hai evolve from a traditional OEM to a comprehensive tech integration service provider, with growth potential attracting attention.

MediaTek (2454): A rising star in mobile chip design

MediaTek ranks second globally in mobile chip design, only behind Qualcomm. Its recent performance in mid-to-high-end chips (Dimensity series widely used in Samsung, Xiaomi, OPPO, vivo, and other brands) has been impressive, with steadily increasing market share.

Beyond mobile chips, MediaTek is actively expanding into AI chips, networking equipment, and automotive electronics, collaborating with TSMC on developing 3nm AI chips. With the long-term expansion of AI and IoT industries, MediaTek’s future growth space is promising.

Delta Electronics (2308): The hidden champion of energy-saving solutions

Delta Electronics is a leading global provider of power management and automation solutions, with products widely used in electronics, industrial automation, electric vehicles, and data centers. Its high-efficiency power technology and energy-saving solutions are internationally renowned, representing ESG investment.

The company has maintained steady growth over the years, with a healthy financial structure and abundant cash flow, continuously paying dividends. As global enterprises accelerate the adoption of energy-saving and automation solutions, Delta’s long-term demand foundation remains solid.

Chunghwa Telecom (2412): A stable fortress among defensive weighting stocks

Chunghwa Telecom is Taiwan’s largest telecom operator, with the most comprehensive communication infrastructure nationwide, covering mobile, broadband, enterprise lines, and data centers. Its stable operations and cash flow make it a typical “defensive weighting stock.”

In recent years, Chunghwa Telecom has actively expanded into 5G, cloud services, and cybersecurity, transforming from a traditional telecom provider into a “digital integrated service provider.” Its stable cash flow supports a consistent dividend policy, with an average yield maintained at 4-5%.

Three investment paths for weighting stocks

Path 1: Select individual stocks for direct investment

If you have sufficient funds and want to participate directly in corporate growth, you can buy weighting stocks directly. It is recommended to prioritize industry leaders with stable profitability (such as TSMC, MediaTek, Delta Electronics).

Operational tips: Focus on three aspects—whether revenue and gross profit are steadily growing, EPS is increasing, and dividend records are continuous and stable. Since weighting stocks tend to have milder fluctuations, consider a 3-5 year or longer investment cycle.

Path 2: Dollar-cost averaging

If you worry about entering at a high point with a lump sum, you can choose to invest periodically to average out costs.

Operational tips: Set fixed investment amounts and periods, select weighting stocks or related ETFs with long-term growth potential, and stick to long-term investment without being swayed by short-term ups and downs.

Path 3: ETF portfolio investment of weighting stocks

If you prefer not to spend a lot of time researching individual stocks, you can choose ETFs tracking weighting stocks, holding multiple leading companies’ shares at once.

Recommended ETFs: 0050, 0056, 00878

ETF investment can effectively diversify individual stock risks, making it especially suitable for beginners entering the market.

Four key warnings for weighting stock investment

Pay attention to overall capital market trends

While weighting stocks are market indicators, if a single weighting stock performs strongly while the index moves in the opposite direction, be extra cautious. Once a trend forms, it is hard to reverse. A strong individual stock often signals potential subsequent correction. Keep close track of capital market movements to capture long-term gains amid volatility.

Study industry prospects thoroughly

After listing, stock prices are entirely determined by the market, and the main reason they become weighting stocks is their representative position in the industry. Therefore, it is crucial to pay attention to the industry environment, especially in an era of rapid technological innovation and changing policies, as industry prospects often determine investment returns. Investing in industries with clear outlooks can lead to more substantial rewards.

Conduct thorough analysis of historical trends and operational status

Before investing, thoroughly understand the target’s historical stock price trends, operational conditions, management movements, etc. Do not blindly follow the crowd. Rational analysis is the prerequisite for risk avoidance and opportunity grasping.

Establish risk management awareness

Regardless of the investment path chosen, adjust strategies according to your own capital scale, risk tolerance, and investment goals. While weighting stocks are relatively stable, they do not mean risk-free.

Start your weighting stock investment journey

After understanding the meaning and investment strategies of weighting stocks, you can begin to put them into practice. Whether choosing individual stocks, dollar-cost averaging, or ETF investments, the key is to find a method that suits you and to adhere to long-term investment discipline.