President Chen Shui-bian (
Speaking at a financial reform seminar sponsored by the Taiwan Thinktank (
In addition the government will remove restrictions requiring QFII's to remit money into Taiwan within two years of their stock investment application approval, Chen said. An official at the Securities and Futures Commission said the changes are expected to take place within days.
QFIIs include foreign banks, insurance companies, fund management institutions, securities firms and funds operated by foreign governments.
"The government is determined to speed up economic liberalization. Hopefully Taiwan will become more accessible to international investment and the local market will be able to go forward at the same pace as its foreign counterparts," Chen said.
In response to Chen's remarks, the TAIEX surged 170.41, or 3.3 percent, to close at 5,322.26 on optimism overseas investors will buy more local shares. Risers led decliners 473 to 180, with 89 stocks unchanged. Turnover was NT$170.47 billion (US$4.96 billion).
Analysts said Chen may be trying to stir up a stock rally ahead of the presidential election next March and may be aiming to strengthen Taiwan's position against China, which is opening its yuan-denominated market to foreign funds for the first time this month.
"President Chen understands that a bullish stock market is good for the investors' pockets," said Phil Chen (
"A deeper pocket will boost consumer spending and the economy, which will help Chen in his re-election bid," he said.
Overseas institutions had a combined US$47.7 billion invested in Taiwan shares as of June 20, according to the Securities and Futures Commission, under the Ministry of Finance. Foreign funds account for about 10 percent of Taiwan's market capitalization.
"Foreign investors were the major supporter of Taiwan stocks when concerns of the Iraq war and SARS scared local investors into dumping shares earlier this year," said Jerry Chen (
Foreign funds will still have to seek approval from Taiwan's central bank and declare the amount they intend to invest. Meanwhile, Chinese capital, which is inextricably linked with cross-strait policies, and international hedge funds, which may impact Taiwan's foreign exchange market operations, will still be barred from entering the country, Wu Tang-chieh (
Vice Minister of Finance Susan Chang (