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Finance workshop sees both rewards and pitfalls ahead

Taiwan will be an "investable" player in the greater Chinese markets, whose equity markets are fast-growing with a high liquidity, an executive director with Goldman Sachs said yesterday at a workshop of the 2003 Taiwan Business Alliance Conference.

Justin Leverenz, head of the bank's Taiwan equity research department, expressed bullish views about the nation's equity markets by linking them to the greater China region's booming equity and bond markets.

He said that Goldman Sachs calculates "Taiwan would emerge as the largest market in the MSCI Emerging Market Index, reaching 25 percent from the current 14 percent if put in the benchmark at full weight," while China is also expected to see a slight upward creep from its 7 percent weight in the index.

Given China's emerging economic power, Leverenz said that the Chinese yuan could double in value in the next 10 years if the exchange rate were allowed to float following a high growth rate, which will then lead to higher returns and growing demand for capital as well as investment portfolios in the greater China region.

Therefore, Leverenz said that the so-called China-concept shares on the TAIEX have the potential to turn into blue chips, especially in the transportation sector, which may surge following the swelling of cargo volumes in China and the imminent opening-up of cross-strait direct links.

While moderating the workshop to address the internationalization of Taiwan's financial markets, Gary Tseng (曾國烈), director-general of the Bureau of Monetary Affairs under the Ministry of Finance, yesterday assured foreign investors that the government is doing all it can to facilitate a sound regulatory system.

The government was allowing foreigners to pick up investment opportunities in the sector while encouraging further consolidation to beef up the sector's competitiveness he said.

He noted that legal revisions have been made to open up the domestic financial service sector by "allowing foreign financial institutions to take up a 100 percent controlling stake in domestic banks."

In response, Jay McLennan, president of Lone Star Asia-Pacific Ltd, expressed interest in buying Taiwanese banks although he said it's still too premature for the leading asset management company to target any banks for acquisition.

Moreover, McLennan expressed a keen interest in buying the nation's non-performing loans.

McLennan confirmed that Lone Star was poised to bid for a portion of the debt-ridden Chung Shing Commercial Bank's (中興銀行) impaired assets.

The bidding is scheduled to take place in December.

As Taiwan's bad-loan market is considered the most active in Asia (Japan excluded), McLennan said the nation's bad-loan sales prices have slightly gone up.

This benefits the banks selling the bad-loans, as a total of 13 foreign asset management companies have increased the competition.
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