Financial Supervisory Commission (FSC) Chairman William Tseng (曾銘宗) might do what his predecessors had wanted to do for the past two decades — expand the daily trading band of local stocks to brace for intensifying competition in Asia, such as China’s Shanghai stock market.
The commission on Monday said that it was seriously considering raising the daily 7 percent limit to 10 percent by the second half of next year.
That is the latest in a slew of short-term deregulation measures the commission has introduced to prop up local stocks since Tseng took office in September last year.
This is not the first time the financial regulator has considered widening the long-standing daily trading limit.
Former Taiwan Stock Exchange Corp chairman Schive Chi (薛琦) in 2000 urged the regulator to lift the fluctuation limit to 10 percent. However, his efforts came to nothing amid widespread skepticism and a faltering global economic recovery from the financial meltdown in 2008.
On Saturday, Tseng brought up the issue again and made widening the trading band one of his mid-term missions to revive the local stock market.
Why now? What has changed? With the rise of emerging stock markets, such as Chinese bourses, foreign investors are losing their appetite for Taiwanese shares, which are subject to stringent restrictions.
Strict regulation was a major factor in Taiwan’s removal in June from Morgan Stanley Capital International’s (MSCI) list of national indices for potential upgrade to developed market status, after having been on the list for five years. The reclassification implies more overseas investment flowing into local stock markets. About US$8 trillion is estimated to be benchmarked to the MSCI indices from around the world.
It is time for the local stock market to be globalized and liberalized, or the local bourse will keep losing competitiveness and momentum.
With 80 percent of investment coming from individual investors, China has kept its daily limit at 10 percent, Tseng said. South Korea plans to broaden the trading band to 30 percent next year from its current 15 percent, while no trading limit is imposed in Hong Kong, Singapore and the US, Tseng said.
“Taiwan should be confident in itself, now that individual investors account for 58 percent of overall trading, down from 80 percent before,” Tseng said.
Apart from an improvement in the proportion of stock investors, the FSC’s confidence is also built on some significant relaxations launched last year for investors to hedge against investment risk due to volatility.
Those measures include allowing day trading — buying and selling stocks within the same trading day — of about 200 stocks targeted by major exchange-traded funds. The commission last year also lifted the ban on short-selling listed stocks traded on margin, even when they lose value.
Brokerages and big stock investors embraced Tseng’s new proposal, saying that relaxing the daily trading limit would make the TAIEX more appealing to foreign investors and enable the TAIEX to catch up to its Asian peers in terms of accessibility. As a result, stock turnover would grow, they said.
The effect was already reflected in Monday’s trading, when the TAIEX climbed to 9,322.95, its highest level in more than three months. Turnover spiked to NT$82.76 billion (US$2.61 billion), from the previous trading day’s NT$39.33 billion, on Friday.
It is good to see more deregulation, but it also means greater volatility. Before implementing new trading rules, the regulator needs to be ready with supporting measures to safeguard investors’ interests. Those measures might include a trading suspension mechanism and better information disclosure.
Congressman Mike Gallagher (R-WI) and Congressman Raja Krishnamoorthi (D-IL) led a bipartisan delegation to Taiwan in late February. During their various meetings with Taiwan’s leaders, this delegation never missed an opportunity to emphasize the strength of their cross-party consensus on issues relating to Taiwan and China. Gallagher and Krishnamoorthi are leaders of the House Select Committee on the Chinese Communist Party. Their instruction upon taking the reins of the committee was to preserve China issues as a last bastion of bipartisanship in an otherwise deeply divided Washington. They have largely upheld their pledge. But in doing so, they have performed the
It is well known that Chinese President Xi Jinping’s (習近平) ambition is to rejuvenate the Chinese nation by unification of Taiwan, either peacefully or by force. The peaceful option has virtually gone out of the window with the last presidential elections in Taiwan. Taiwanese, especially the youth, are resolved not to be part of China. With time, this resolve has grown politically stronger. It leaves China with reunification by force as the default option. Everyone tells me how and when mighty China would invade and overpower tiny Taiwan. However, I have rarely been told that Taiwan could be defended to
It should have been Maestro’s night. It is hard to envision a film more Oscar-friendly than Bradley Cooper’s exploration of the life and loves of famed conductor and composer Leonard Bernstein. It was a prestige biopic, a longtime route to acting trophies and more (see Darkest Hour, Lincoln, and Milk). The film was a music biopic, a subgenre with an even richer history of award-winning films such as Ray, Walk the Line and Bohemian Rhapsody. What is more, it was the passion project of cowriter, producer, director and actor Bradley Cooper. That is the kind of multitasking -for-his-art overachievement that Oscar
Chinese villages are being built in the disputed zone between Bhutan and China. Last month, Chinese settlers, holding photographs of Chinese President Xi Jinping (習近平), moved into their new homes on land that was not Xi’s to give. These residents are part of the Chinese government’s resettlement program, relocating Tibetan families into the territory China claims. China shares land borders with 15 countries and sea borders with eight, and is involved in many disputes. Land disputes include the ones with Bhutan (Doklam plateau), India (Arunachal Pradesh, Aksai Chin) and Nepal (near Dolakha and Solukhumbu districts). Maritime disputes in the South China