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Business leader calls for an easing of investment caps

The government should instigate further liberalization measures to sustain the local bourse's vigor, given the rapidly growing number of overseas-based Taiwanese companies going public in Hong Kong in recent years, an industry leader said yesterday.

"More overseas and China-based Taiwanese firms are likely to make their initial public offering (IPO) in Hong Kong next year than this year," Chien Hung-wen (簡鴻文), chairman of the Taiwan Securities Association (證券公會), said yesterday.

According to statistics compiled by Hong Kong Exchange & Clearing Ltd, Hong Kong has so far attracted HK$307.7 billion (US$39.57 billion) in IPOs this year, making the territory the world's second-most popular place for companies to trade new shares after London.

London has raised US$48.92 billion in IPOs this year according to the World Federation of Exchanges' statistics.

Chien said the industry is worried about the trend, adding that the nation's China-bound investment restrictions are key to the issue.

Chien, who also chairs Mega Securities Co (兆豐證券), urged relaxation of the restriction that caps investment in China at a maximum of 40 percent of one company's net worth, in order to prevent the local capital market from draining away.

As of October, eight overseas and China-based Taiwanese firms made their debuts in Hong Kong, bringing the total to 48 with a market value of around HK$256.9 billion, or 4 percent of Hong Kong's equity market, according to data from the Chung Hua Institution for Economic Research (中經院).

The total is expected to climb to 55 next year with the market value rising to HK$312 billion, according to Mega Capital (Asia) Co (兆豐資本).

Taiwanese companies that plan to go public in Hong Kong next year reportedly include the China-based spin-off of Uni-President Enterprises Corp (統一企業), Taiwan's leading food manufacturer whose China-bound investment is approaching the regulatory ceiling.

The first quarter of next year could be the best time for the government to carry out any cross-Strait relaxation measures before the next legislative session starts, Chien said.

The association believes the government could allow it to sign a memorandum of understanding with its Chinese counterpart, which sets conditions for local securities houses' establishment of subsidiaries in China, he added.

Thus far nine local brokerages have set up 12 representative offices in China.

The association is striving for the approval of China-bound investment via subsidiaries in a third location to be exempt from Memorandum of Understanding precondition requirements, in order to help Taiwanese securities houses' expansion across the strait, Chien said.

The association is holding a 50th anniversary celebration today, in which government officials, including Premier Su Cheng-chang (蘇貞昌) and Financial Supervisory Commission Chairman Shih Jun-ji (施俊吉), will speak.

additional reporting by ap
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