Tue, Nov 27, 2007 - Page 12 News List

FSC says bourses in talks with HK over dual listings

HONG KONG IPO Uni-President China and Uni-President Enterprises Corp plan to sell a combined 881.72 million shares to fund expansion and promote their brands

By Joyce Huang  /  STAFF REPORTER , WITH BLOOMBERG

Taiwan is in talks with Hong Kong on allowing the dual listing of exchange traded funds (ETFs) on both stock markets, Financial Supervisory Commission (FSC) Chairman Hu Sheng-cheng (胡勝正) said yesterday.

"The Taiwan Stock Exchange Corp (證交所) and GRETAI Securities Market (櫃買中心) are talking to their counterparts in Hong Kong, inking an memorandum of understanding [MOU] to allow the dual listing of ETFs on both Taipei and Hong Kong bourses," Hu told a legislative session yesterday.

ETFs are index funds that follow the market's benchmark and trade just like stocks on major stock exchanges.

The commission was also looking forward to facilitating the local bourses' plans to list ETFs on other Asian markets, including Singapore, Japan, South Korea and Thailand, while inviting other countries' ETFs to list here, Hu said.

The Taiwan-Hong Kong deal is viewed as a cross-strait deregulatory move that will allow Taiwanese investors to buy Chinese stocks via ETFs while allowing Chinese and Hong Kong investors to trade Taiwanese shares.

But China-bound investments and New Taiwan dollar-yuan forex could also be involved, so the SEC would discuss those issues with the Mainland Affairs Council and the central bank before inking the MOU, Hu said.

In related news, Uni-President China Holdings Ltd (統一企業中國控股公司), the Chinese unit of Taiwan's biggest processed food maker, may raise as much as HK$4.13 billion (US$531 million) from a Hong Kong initial public offering (IPO) with its parent, the firm said in an e-mail.

Uni-President China and parent Uni-President Enterprises Corp (統一企業) are selling a combined 881.72 million shares at HK$3.75 to HK$4.68 apiece, the e-mail said.

The high end of the range for the sale of a 25 percent stake values Uni-President China at HK$16.5 billion, the e-mail said.

Uni-President China, the nation's largest maker of juice drinks and third-biggest supplier of instant noodles, is raising capital to expand, promote its brands and make strategic investments. Sales of pure fruit juices and diluted juice products in China averaged 12.5 percent annual growth to 11.8 billion yuan (US$1.6 billion) last year from 2004.

"I like their market shares in the drinks area, although the noodles business is kind of flat or going down," said Andy Mantel, Hong Kong-based managing director of Pacific Sun Investment Management Ltd.

"The penetration rates for the tea, the juices and carbonated drinks are still very low," he said.

Uni-President has been expanding sales of yogurt and drinks -- including tea, coffee and bottled water -- to offset stagnant revenue and losses from instant noodles. Juice product sale in China, in particular, has benefited from rising household incomes, increasing health consciousness and better product packaging, the share sale document said, quoting market researcher ACNielsen.

About 60 percent of the shares being offered in the IPO are new and the rest are being sold by a firm wholly owned by Uni-President.

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