Taiwan is to open a cross-border stock trading platform with Singapore on July 1, the Financial Supervisory Commission (FSC) said.
Taiwan is seeking to draw more global investors into its equity market, FSC Chairman William Tseng (曾銘宗) said yesterday as he outlined the program’s start date. The link follows the opening of cross-border trading between Shanghai and Hong Kong in November last year.
“Capital internationalization is a global trend,” Tseng said at a forum. “We want to push internationalization of Taiwan’s security market, starting regionally and then to countries farther away.”
The Taiwan and Singapore bourse operators made a pact in September last year to study an exchange link, with Taiwan Stock Exchange (TWSE) chairman Lee Sush-der (李述德) saying then that it would take about six months.
Taiwan’s 150 biggest stocks are to be eligible for investment through the program, TWSE president Michael Lin (林火燈) said in December last year.
Demand from Chinese investors for Hong Kong shares pushed the Hang Seng Index to a seven-year high on April 13, proving that connectivity between Asian stock exchanges can boost prices, Singapore Exchange Ltd (SGX) CEO Magnus Bocker said last week.
“The success in Hong Kong has been very beneficial to all other markets in Asia,” Bocker, who leaves the bourse in June, said in an interview in his offices. “You will see more connectivity in Asia going forward.”
Yesterday in Asia trading, shares in Taiwan rose by 0.83 percent, while Singapore was off 0.35 percent. Shanghai soared 2.44 percent and Hong Kong rose 0.30 percent.
Since the connect started on Nov. 17, foreign investors have utilized 42 percent of the 300 billion yuan (US$48.4 billion) aggregate quota to pick up Shanghai-listed shares, while Chinese buyers used 29 percent of the 250 billion yuan quota for Hong Kong stocks, according to data compiled by Bloomberg.
SGX is to keep the market informed of any developments in its work with Taiwan on a link, according to an e-mailed statement from the bourse yesterday.
Taiwan might also be about to get an influx of demand from Chinese investors. The China Securities Regulatory Commission (CSRC) said it was studying cross-strait trading between Shanghai and Taipei, the Chinese-language Economic Daily News reported yesterday, citing CSRC vice chairman Jiang Yang (姜洋).
Jiang said in the report that whether a Taipei-Shanghai stock exchange will be implemented is up to the will of authorities in Taiwan to open the door to such market exchanges.
While not ruling out a feasibility study for a link, Tseng said Taiwan has yet to examine the matter. There are technical issues, he said, adding that allowing the Shanghai and Taiwan bourses to compile indices based on each other’s stocks would be a good starting point.
Tseng said a Taipei-Shanghai trading mechanism is a complicated issue that would require involvement by many institutions to make happen, while Taiwan itself should reach a consensus on whether or how to implement it, he said.
He said he believes that using a step-by-step approach to pursue cross-strait capital market cooperation would strengthen mutual understanding between each side and pave the path for further exchanges in the future.
Additional reporting by CNA
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