Taiwan plans to open links with several major equity markets to offset a potential threat from a stock link mechanism between Shanghai and Hong Kong that is set to open today.
Authorities in Shanghai and Hong Kong on Monday last week said that the equity markets in those two places would today launch the “Shanghai-Hong Kong Stock Connect,” enabling foreign investors to trade Chinese A-shares in Hong Kong and investors in Shanghai to trade Hong Kong shares in China.
The announcement rattled Taiwanese equity markets. Turnover on the Taiwan Stock Exchange on Friday was an anemic NT$73.6 billion (US$2.4 billion) amid fears that the new link would tempt investors in Taiwan to move funds to Hong Kong to buy stocks listed in Shanghai.
However, the Financial Supervisory Commission believes that investors would continue to buy local shares because the finances of companies listed in Taipei are transparent and the local market has a relatively high turnover ratio.
Speaking at a hearing held by the legislature’s Finance Committee on Thursday, commission Chairman William Tseng (曾銘宗) said a stock link between Taiwan and Singapore should be launched in the first half of next year and would be followed by a similar mechanism between Taiwan and Japan.
Negotiations on a link between markets in Taiwan and London are also underway, Tseng said.
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