The Financial Supervisory Commission (FSC) yesterday raised the investment limits by domestic fund managers in Chinese securities to 30 percent of net asset worth, from the current 10 percent.
The financial regulator said the relaxation aims to allow local securities investment trust and asset management firms greater flexibility in meeting the needs of investors so they could better compete with foreign rivals.
Henry Lin (林弘立), chairman of securities investment trust and consulting association, said the opening would make the performances of cross-strait securities markets closer.
The move will also help channel Taiwan’s excessive liquidity to China to exploit its fast--growing economy, Lin said.
The 30 percent cap will not apply to exchange traded funds (ETFs), meaning local fund managers can create 100 percent investment funds traded on China’s stock exchanges.
Currently, China-linked ETFs are all issued by companies in Hong Kong or other third locations, which causes investors to pay higher fees.
“The nation will soon see domestically created China funds following the relaxation,” Lin said.
Fubon Asset Management Co (富邦投信), among others, has applied to launch such products to help customers capitalize on Chinese equities.
Financial firms have also been calling on the government for looser lending rules governing Taiwanese branch offices in China. Officials from Taiwan and China are slated to discuss the issue in April.