The local capital market has a chance of becoming a gateway to Chinese markets if the Democratic Progressive Party government allows Taiwanese businesses based in China to list on the local bourse, commentators said yesterday at a seminar.
"The formula for business success today [in the greater China region] can be summarized as Chinese markets, Taiwanese business management expertise plus international capital," said Wang Kuei-ching (王貴清), chief financial officer of the Ho Tung Group (和桐集團), the nation's first investment holding company, at a seminar organized by the Epoch Foundation (時代基金會) yesterday that discussed the capital-raising capabilities of multinational firms.
Wang, a former chief financial officer of Ting Hsin International Group (頂新集團), yesterday urged the government to divest itself of its "rigid mentality of fearing China" and allow the local capital market to prosper "as a turnpike for China-bound multinational investors."
Edward Tsai (蔡松棋), a certified public accountant at KPMG (安侯建業), agreed, saying that compared to neighboring capital markets, the local stock market enjoys the advantages of a lower price-earnings ratio, lower listing costs and high liquidity, which makes it a market with great potential for China-based Taiwanese businesses to trade on.
But Du Ying-tzyong (
Du said that few of his clients have expressed interest in listing on the local stock market, since most of their money is bound for China and the stock market in Hong Kong is usually their bourse of choice.
Compared to other neighboring capital markets, Taiwan has set up a tighter capital-flow hurdle that scares away multinationals, Du said, adding that if this hurdle was removed, Taiwan could then facilitate its goal of becoming the region's capital-raising hub.
According to Du, other obstacles include the fact that multinationals are restricted from moving more than 20 percent of capital raised in Taiwan to China while also enduring a lock-up period as long as five years and a 10-day underwriting period when trying to buy local shares.
Other panelists, including Peter Kurz, dubbed "Mr. Taiwan" by the local media, and Huang Chi-yuan (
The challenge facing the majority of local businesses now, however, is further consolidation or expansion by mergers and acquisitions, Huang said.
Huang yesterday encouraged local businesses to branch out by taking over overseas business units before mulling plans to become listed companies.
After witnessing the completion of a number of government-motivated mergers among financial institutions, Kurz said that he was expecting to see more mergers and acquisitions driven by the private sector to create business synergy.
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