China’s qualified direct institutional investors (QDIIs) won’t be allowed to trade on the local bourse until a cross-strait memorandum of understanding is inked, a financial official said yesterday.
“Given the flexibility in Chinese regulations, QDIIs in China will be immediately allowed to purchase commercial paper, corporate or convertible bonds or collateralized debt obligations, as well as currency-related funds, but not Taiwan Stock Exchange equities,” Securities and Futures Bureau Director-General Lee Chi-hsien (李啟賢) said.
Other potential investment vehicles for Chinese QDIIs include bank notes, short-term government bonds, forward swaps and structured notes, Lee said.
Lee’s comment came in the wake of the Financial Supervisory Commission’s (FSC) announcement on Wednesday that it planned to open the domestic stock and futures market to Chinese QDIIs.
Market expectations that the local bourse would be immediately opened to Chinese investment drove the TAIEX sharply up yesterday.
The FSC estimates that 3 percent of Chinese QDII funds, or NT$7 billion (US$210.6 million), is now able to be invested in Taiwan.
Once an MOU is inked, the cap could be raised to 10 percent, or NT$23.3 billion, Lee said.
Chinese QDIIs, however, would be prohibited from directly taking up more than a 10 percent stake in Taiwan’s listed companies.
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