Shares of local securities companies moved sharply higher yesterday morning after financial regulators from Taiwan and China agreed on new investment measures to boost the securities sector, dealers said.
Among the new measures that buoyed investor sentiment was China’s plan to allow a limited number of Taiwanese securities firms to set up full-service joint ventures in several major Chinese cities, they said.
As of 11:25am, shares in President Securities (統一證券) had added 3.24 percent to NT$17.50, MasterLink Securities shares (元富證券) had risen 4.62 percent to NT$9.73 and Capital Securities (群益證券) was up 5.43 percent at NT$11.65.
Shares of Fubon Financial Holding (富邦金控), which owns Fubon Securities (富邦證券), had added 1.49 percent to NT$37.40, while shares of Yuanta Financial Holding (元大金控), which operates Yuanta Securities (元大證券), had risen 4.25 percent to NT$15.95.
“The new measures showed China is stepping toward more liberalization and such a move is expected to benefit the local securities business, which has long coveted the huge Chinese market,” Horizon Securities (宏遠證券) analyst Benson Huang (黃重善) said.
The Financial Supervisory Commission (FSC) and China’s Securities Regulatory Commission said after a meeting on Tuesday that China could issue three full-service securities firm licenses to Taiwanese firms to set up joint ventures in Shanghai, Shenzhen, and China’s Fujian Province.
Taiwanese investors will be allowed to hold up to a 51 percent stake in the three joint ventures.
Chinese regulators may also allow Taiwanese securities firms to set up a single joint venture in each of six other cities, such as Pudong, Chongqing and Quanzhou, in which they will be allowed to hold up to a 49 percent stake.
The FSC said the new measures will be included on the future negotiations under the Economic Cooperation Framework Agreement.
“I suspect large-sized local securities firms, such as Yuanta Securities, Fubon Securities and KGI Securities, will have a better chance to obtain the licenses once the new measures take effect,” Huang said.
However, he added that he worried that the buying in the local bourse would spread to small and medium-sized firms, which would face a pullback after investors realized that their chances of getting any of the nine licenses are bleak.
The FSC also said it would gradually raise the cap on investment by Chinese institutional investors in Taiwan, while Beijing said it would consider giving Taiwanese firm the status of Renminbi Qualified Foreign Institutional Investors with a set quota on a trial basis.