Foreign banks in Taiwan have expressed mixed views on a long-stalled cross-strait investment protection pact that is expected to be signed at the eighth round of high-level talks between Taiwan and China, which are set to begin on Aug. 9.
Taiwan is pushing for the investment pact because it wants to protect its businesspeople in China, who can be vulnerable in disputes with Chinese local governments over land rights and compensation claims.
Citing media reports, UBS Securities, Taipei Branch, said that under the terms of the agreement, conflicts between Taiwanese and Chinese businesses would be resolved through arbitration and there would also be a 24-hour notification system in the event of a Taiwanese investor being arrested in China.
“We believe this is a positive step forward, but do not consider it game changing,” UBS analysts said in an investment research note released on Monday.
The Swiss global financial services company said that although the pact is certainly important and much-needed, it is unlikely “to serve as a major catalyst for the market.”
UBS said it believed it might begin to see an improvement in sentiment in November or December at the earliest, reflecting a potential pick-up in the market in the second quarter of next year.
“Until then, we will maintain our defensive stance on the market,” the company said.
Meanwhile, British bank Barclays maintained “a more defensive positioning within Taiwan” until macro data improves, saying that “there will be no immediate fundamental impact.”
However, the signing of the agreement indicates that China is making an effort to add more structure to protecting Taiwanese investors and increasing transparency, Barclays said.
Meanwhile, US-based Bank of America Merrill Lynch held a more positive view of the pact, describing it as one of the main events that might drive Taiwan’s economy.