Taiwanese brokers are to stop taking buy orders for shares and exchange-traded funds (ETFs) linked to Chinese military companies, a Taiwan Securities Association spokesperson said yesterday.
The measure applies to stocks and ETFs traded through the Shanghai or Shenzhen stock connect links, the spokesperson said.
Investors can continue to hold the stocks they already own, they added.
Photo: An Rong Xu, Bloomberg
The move is a result of a consensus reached within the industry as early as October, rather than a direct reaction to this weeks military drills conducted by China around Taiwan, the Financial Supervisory Commission (FSC) told Bloomberg News.
The shift means that buy orders would no longer be accepted for military-related A-shares that are in the US Department of the Treasury’s Office of Foreign Assets Control sanctions list, the FSC and the association said.
The move would affect less than 0.5 percent of Taiwanese investors’ overall exposure to foreign stocks, the FSC said.
The announcement comes at a sensitive time, with China appearing to have just wrapped up the large-scale military drills.
While regulators said that the decision was unrelated to the exercises, the timing nonetheless drew attention given the heightened cross-strait tensions and increased market sensitivity to geopolitical risks.
Brokers started notifying clients last month.
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