China’s qualified domestic institutional investors (QDII) will be allowed to invest up to US$500 million in Taiwan’s stock market after Premier Wu Den-yih (吳敦義) approved the regulations governing the investment yesterday, the Financial Supervisory Commission (FSC) said last night.
The FSC initially proposed allowing Chinese QDII funds to invest up to US$1 billion, but Wu decided to reduce the cap by half at the suggestion of central bank Governor Perng Fai-nan (彭淮南).
Lee Chi-hsien (李啟賢), director-general of the Securities and Futures Bureau of the FSC, told a press conference last night that Perng made the suggestion “out of the concern of stabilization of local financial markets.”
Taiwan will see the injection of the Chinese capital into stock markets on Monday at the earliest as two QDII funds have already registered with the stock exchange regulatory authority, Lee said.
Under the regulations, the ceiling of each QDII fund in the country was set at US$80 million.
PROHIBITION
The rules prohibited Chinese funds from buying shares of civil air transport enterprises, air cargo companies, the Taiwan Stock Exchange, the Taiwan Futures Exchange, security industry, construction and development industry, real estate broking industry, broadcast and television industry, suppliers of broadcast and television programs, and telecommunications.
On financial services, the ceiling of each Chinese QDII fund is set at less than 5 percent of a company’s shares, while a cap of all Chinese QDII funds is 10 percent.
NATURAL GAS
A Chinese QDII fund will be allowed to invest less than 10 percent in a natural gas company or in a state-owned company possessed by the Ministry of Economic Affairs, while the cap of Chinese QDII funds in such companies is also set at 10 percent.
The rules were approved before the cross-strait memorandum of understanding on financial supervision cooperation, signed two months ago, takes effect today.
Regulations of wider opening of banking and insurance sectors, which were also covered under the agreement, have yet to be approved by the Executive Yuan.
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