Thu, Nov 16, 2006 - Page 11 News List

Motley Fool backs local shares

SAFER ACCESS The firm offering financial services to individual US investors says that Taiwanese shares offer a degree of security that Chinese stocks cannot

AP , TAIPEI

Global investors can buy shares in Taiwan to tap China's explosive growth because of Taiwan's safer regulatory environment, said an analyst with The Motley Fool, a US financial services company.

Taiwanese companies have invested heavily in China over the past two decades, more so than most other regions in the world, senior financial analyst Bill Mann told Dow Jones.

"Taiwan in particular, to me, offers an interesting and somewhat safer way to invest in China," Mann said.

The Motley Fool, which serves mainly individual investors in the US and says it has about 5 million visitors a month at its Web site, has been pushing its customers to invest outside the US, including in Taiwanese firms.

A major advantage of Taiwanese stocks is the better supervision compared with stocks traded in China. Hong Kong and Taiwanese firms offer relatively safe alternatives to Chinese shares, Mann said.

"I like the fact that Taiwan has its own regulatory environment that the People's Republic of China can't touch," he said.

Taiwanese investment in China has reached more than US$100 billion to date, according to a Taiwanese government estimate.

In the past, foreign investors were drawn to Taiwanese stocks for their heavy exposure to the technology sector.

Mann cited the examples of Hon Hai Precision Industry Co (鴻海精密) -- the biggest global electronics contract manufacturer -- and Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) -- the world's biggest contract chipmaker by revenue.

But Mann said that Taiwan's investment relationship with China was "an underestimated component of investing in Taiwan."

Taiwanese companies, including the high-tech manufacturers that have been behind the nation's economic growth, are expected to continue investing in China.

Activity is likely to gather pace because of a potential easing in the Taiwanese government's restrictions on investments.

TSMC, for example, is so far the only Taiwanese chipmaker that has been allowed to build a factory in China.

But President Chen Shui-bian's (陳水扁) government is expected to approve applications by ProMOS Technologies Inc (茂德科技) and Powerchip Semiconductor Corp (力晶半導體) to build chip factories in China by the end of this year.

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