Local share traders eye China stocks

Now that the China's B-share market, originally reserved for foreign institutional investors, has been opened up to retail investors, investors from Taiwan are searching for stock prospects across the Strait.

Asiaweek (亞洲週刊) reported that the local investors are now buying stocks in China, thanks to a weakening domestic market and slowing economy here.

Asiaweek quoted Chou Hua-mei (周華美), chief representative of Taiwan's Core Pacific Securities's (京華證券) Shanghai branch, as saying that many Taiwanese are converting their New Taiwan dollars into US currency.

But falling US interest rates, which result in a lower rate of return on US dollar holdings, as well as China's decision to allow domestic retail investors to buy B shares, may trigger a new wave of Taiwanese investment in the Chinese stock market, analysts said.

Taiwanese are allowed to invest in the mainland market as they are considered local investors by authorities there.

Taiwanese investors are already active in China as the behavior and the culture of stock investing in China is highly similar to the "early development" of the Taiwanese stock market. The market can be highly volitile and often moves on unfounded rumours.

Indeed, Taiwan-born Sun Wen-hsiung (孫文雄) was recently tipped as the biggest individual stockholder in Shanghai in a survey of the top shareholders conducted by the Shanghai-based New Wealth Magazine (新財富).

Sun, who owned, among others, 18 million A shares of Shanghai's Pilkington Glass, was ranked as the firm's number five shareholder. Chen Tsu-lung (成自龍), Shanghai representative of Taiwan's Jih Sun Securities (日盛証卷), said that major investors, like the Taiwan-born Sun, are gobbling up stocks in China.

China last week allowed local investors to buy B shares -- originally restricted to foreigners -- as a part of its deregulation moves prior to its entry into the WTO.