In a move to strengthen Taiwan's financial markets and make the nation a financial hub in Asia, the Executive Yuan unveiled a set of measures recently that will further relax controls over Chinese mainland investment on the island. Wu Tang-chieh, deputy minister of the Financial Supervisory Commission, said qualified domestic institutional investors from the mainland would be permitted to invest in the Taiwan Stock Exchange and the over-the-counter GreTai Securities Market from October this year. “It is estimated that an initial US$1.125 billion will be channeled into Taiwan's stock market when the measure is implemented,” Wu said. The deputy minister said since both sides are yet to sign a memorandum of understanding on this matter, only 3 percent of mainland Chinese QDII funds can be invested in the local bourse. This is because of a cap imposed by China on outbound investments to countries that have not inked MOUs with it. “The Taiwan-bound mainland Chinese QDII investment would be bigger if the two sides sign an MOU,” Wu said. According to the FSC, Chinese mainland QDIIs would not be able to speculate on the Taiwan bourse given the terms of the mainland Chinese regulations. These include a 10-percent ceiling on holdings for each stock and a restriction on QDIIs from the mainland becoming major shareholders in any Taiwanese company by controlling large amounts of shares. “Investment in semi-state-run enterprises, such as Chunghwa Telecom Co., Ltd. and China Airlines Co., would only be allowed with the approval of the Investment Commission under the Ministry of Economic Affairs,” Wu added. Katie Tu, a vice president of Yuanta Investment Consulting Co. Ltd., said that in the long term, the anticipated flow of mainland Chinese capital should spell good news for the TAIEX.
