With the implementation on Saturday of a cross-strait memorandum of understanding (MOU) on financial supervisory cooperation, top Taiwanese blue-chip companies will be the first to benefit from investment by China’s qualified domestic institutional investors (QDIIs) on the Taiwanese stock market, analysts said.
With a cross-strait 500 index tracking stocks on the China, Hong Kong and Taiwan bourses set to be launched today, they said, the stocks included in the index are very likely to become the first target of QDIIs.
Leading Taiwanese companies such as Taiwan Semiconductor Manufacturing Co (台積電), Hon Hai Precision Industry Co (鴻海精密), MediaTek Inc (聯發科), HTC Corp (宏達電), Quanta Computer Inc (廣達電腦), Compal Electronics Inc (仁寶電腦), AU Optronics Corp (友達光電), Formosa Plastic Corp (台塑) and China Steel Corp (中鋼) are included in the index.
The CSI Cross-Strait 500 index, launched by the China Securities Index Co (CSI), will pick 500 stocks as samples — 300 stocks from the CSI-300 index, 100 from the CSI Hong Kong 100 index and 100 from the Taiwan Stock Exchange.
The CSI said the sample stocks would be changed every six months.
The combined market value of the 500 stocks is said to total 32 trillion yuan (US$4.7 trillion), accounting for about 75 percent of the total value across the three markets, the CSI said.
Institutional investors said listed companies with good a reputation or distribution networks in China would also become the targets of QDIIs.
In addition, financial, banking and commodities issues will also attract the attention of Chinese investors.
HSBC Taiwan Phoenix Fund manager Huang Shih-chia (黃世洽) said that as the New Taiwan dollar has been appreciating and the MOU has taken effect, financial shares — which generally lag behind rises on the broader market — are expected to keep attracting funds in the short term.
Huang said steel shares could also get a boost as global commodity demand strengthens.
On Friday, the government announced it would limit total investment by Chinese QDIIs to US$500 million. QDIIs are also barred from investing in several sectors, including civil aviation, air cargo, securities and futures, private security, construction, real estate brokerage and telecommunications.
But Chao Teng-hsiung (趙藤雄), chairman of the Farglory Group (遠雄企業團), on Saturday expressed disappointment at the government’s scaled-down relaxation on Chinese QDIIs investment in local equities.
“The government is too conservative,” Chao said. “If the local economy misses the chance to get internationalized, the nation’s unemployment plight will worsen.”
Chao urged the government to accelerate its relaxation pace and allow Chinese investors to buy more Taiwanese shares.
ADDITIONAL REPORTING BY JOYCE HUANG
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