Financial Supervisory Commission (FSC) Chairman William Tseng (曾銘宗) yesterday reiterated his confidence that funds would flow from the property sector to the local bourse this year as the government seeks to boost the capital market.
He made the remark while taking questions from members of the legislature’s Finance Committee.
“Stock turnover has increased to an average of NT$139.8 billion [US$4.6 billion] a day this month, from NT$121.1 billion a day last month,” Tseng said.
He attributed the pickup to day trading and regulatory easing measures.
The Treasury also benefited, as stock transaction taxes jumped 27.5 percent in the past two months from the same period last year, he said.
The commission is reportedly mulling further deregulation, including lowering capital requirements on domestic life insurance companies so that they may increase equity holdings.
Life insurers now have to set aside a 25 percent provision for their stock investment, which is higher than the 11 percent required of their peers in other advanced economies, the Chinese-language Commercial Times reported.
Local life insurers’ stock holdings totaled NT$1.09 trillion last year, accounting for 8 percent of their portfolio, although they may invest up to 35 percent, the paper said, adding that the firms wired NT$1 trillion abroad last year.
Insurance firms could pour NT$500 billion to NT$600 billion into the local bourse once the commission lowers the capital requirement to a level commensurate with a mature market, and the increased stake could hit NT$4 trillion in the long term, the newspaper said.
The commission is likely to lower the capital requirement in May or June, the paper said.
The commission will strengthen risk control oversight while seeking to build Taiwan into an offshore yuan market, Tseng said, after yuan deposits reached 214.5 billion yuan (US$34.9 billion) in January, less than a year after yuan deposits were allowed.
The fast-growing yuan deposit market suggest a need for yuan-based investment tools, which could leave investors vulnerable to yuan-linked risks, opposition lawmakers said.
However, Tseng shrugged off the concern, saying that yuan deposits in Hong Kong total 800 billion yuan and investors can hedge against yuan assets.
Tseng also pledged to step up inspections to prevent tax-evasion linked to offshore banking and securities operations.
Only foreign clients and those with dual citizenship may benefit from a recent series of deregulations aimed at boosting offshore banking and securities units, he said.
CTBC BANK FINED
In other developments, the commission on Tuesday fined CTBC Bank (中信銀) NT$10 million for violating banking rules and suspended it from making indirect investments.
CTBC Bank, the main subsidiary of CTBC Financial Holding Co (中信金控), hid an investment in an information company in Shanghai, China, that is managed by former CTBC Bank employees, the commission said.
While CTBC Bank said it has no ties with the Shanghai company, it obviously had control over the firm without the knowledge of its board or the FSC, the commission said.
CTBC Bank may not launch any investment or expansion undertaking until it remedies the issue, the commission said.
The punishment will delay the conglomerate’s acquisition of Japanese lender Tokyo Star and Taiwan Life Insurance Co (台灣人壽).
However, the commission’s ruling had no impact on CTBC Financial’s shares, which ended flat in Taipei trading yesterday at NT$19.45, stronger than the TAIEX’s 0.2 percent dip, Taiwan Stock Exchange data showed.