Local fund managers are calling for greater deregulation to facilitate overseas expansion and boost cross-strait investment as an uncertain global economy looks set to dampen risk appetite and business this year.
The Financial Supervisory Commission can help invigorate the local bourse by raising the limit on Chinese ownership of shares in listed companies, Securities Investment Trust and Consulting Association chairman Henry Lin (林弘立) told a news conference yesterday.
Individual investment by Chinese qualified domestic institutional investors (QDII) is currently capped at US$100 million, while aggregate QDII investment may not exceed US$500 million.
“The local stock market can benefit from a stronger dose of capital dynamism if the financial regulator ditches the limits,” Lin said.
The commission can strengthen oversight and ease speculation concerns by requiring QDII investment to go through onshore trust funds, Lin said.
The establishment of separate trust fund accounts would give the commission a better grasp of QDII movements and help domestic asset management companies to grow, he said.
He also urged the commission to secure an agreement promptly with its Chinese counterpart to allow the sale of Taiwanese funds via Chinese banks as offshore wealth management products.
Such a pact would help expand business volume and custodian revenue for bilateral lenders and securities houses, Lin said.
Meanwhile, Taiwanese asset management companies should seek to boost their competitiveness and economic scale in a world marked by increasing globalization, Lin said.
Toward that end, local fund managers should strengthen professional know-how and operations to aid their development into a core business for their parent companies, Lin said.
Cathay Life Insurance Co (國泰人壽), the flagship subsidiary of Cathay Financial Holding Co (國泰金控), set a good example last year by asking its asset management unit to run a NT$150 billion (US$4.96 billion) fund earmarked for investment in local shares, Lin said.
Lin encouraged offshore trust funds to follow suit and take advantage of local counterparts that have better knowledge of domestic firms and share price movements.
About half of Taiwanese stock analysts expect the TAIEX to consolidate this year as the European sovereign debt crisis and China’s economic slowdown weigh on sentiment, the association’s annual survey showed.
About 17 percent take a rosy view, projecting a small rally going forward, while an equal number forecasting a fall, the survey found.
Cathay Securities Investment Trust (國泰投信) president Jeff Chang (張錫) said many local shares were undervalued and could be attractive long-term investment choices.