The local stock market must be able to attract more overseas capital before the financial regulator allows companies with Chinese capital — which so far have been listed elsewhere — to dual or cross-list here, lest it face a capital squeeze on domestic shares, pundits said yesterday.
“Nearly 35 percent of TAIEX share buyers are overseas investors, who have caught the ‘China fever’ and may prefer China-concept shares to local shares once the government opens up and allows more China-based Taiwanese companies to return and list here,” Wea Chi-lin (魏啟林), professor at National Taiwan University’s business school, said by telephone yesterday.
Wea said the new policy would mostly apply to China-based Taiwanese companies because few publicly traded Chinese companies would consider dual-listing on the TAIEX as most domestic shares would be price-competitive, with a low price-to-earning ratio.
Although Wea agreed with the government’s policy, he urged regulators to come up with new measures such as tax breaks to attract foreign capital and strengthen the domestic capital market’s international competitiveness.
But Chi Schive (薛琦), who was appointed chairman of the Taiwan Stock Exchange yesterday, said that “having more companies listing on the TAIEX would help attract foreign capital later,” which would maximize the bourses market capitalization.
“Taiwan has to open its market,” he said.
After taking office, Chi said the exchange would soon address measures to facilitate his prioritized dual-listing by China-based Taiwanese companies while formulating a fair platform and sound regulatory system for investment here.
As of May, 68 Taiwanese companies were listed in Hong Kong, 22 in Malaysia, 19 in Singapore, 14 in Thailand and 6 in Vietnam, Chi said.
Financial Supervisory Commission (FSC) vice chairwoman Lee Jih-chu (李紀珠) told reporters on Tuesday that the commission would soon finalize a proposal to scrap the 20 percent cap on China-based companies, which are not registered in China and have shown a willingness to list in the local bourse.
“No capital cap will be imposed on such companies,” she said, adding that companies with Chinese capital would have a higher degree of financial transparency.
She said, however, that the capital those companies would raise here could still be subject to the 60 percent ceiling if investment is China-bound.
As local regulators may have problems looking into those companies’ finances, firms with less than 40 percent of Chinese capital could also be allowed to list on the TAIEX, Lee said.
Companies with Chinese capital are barred from listing on the TAIEX as their first capital-raising market.
The proposals are scheduled to be sent to the Cabinet today for final approval.
But Edward Chow (周行一), a former FSC commissioner and now dean of National Chengchi University’s college of commerce, said yesterday that the commission was not aggressive enough in its efforts to transform Taiwan into a regional financial hub, where a free flow of capital should be encouraged.
“The government should worry less about where business capital comes and goes, as companies know best,” Chow said yesterday during a telephone interview, adding that the government should worry more about how to make the economy prosperous and competitive to retain and attract business, domestic and foreign.
Dual-listings or cross-listings are common in highly mature capital markets such as New York, London, Hong Kong and Singapore. Taiwan should not limit itself to the goal of developing as a regional financial center, he said.
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