Chinese nationals will be able to purchase mutual funds tracking Taiwanese stocks and bonds from next month, the Financial Supervisory Commission (FSC) said yesterday.
Chinese who can benefit from the change include those with residency in Taiwan, such as investors, proprietors of businesses and spouses, as well as tourists, it said.
The change will also allow Chinese investors to purchase fund products denominated in foreign currencies without going through a custodial bank, FSC Vice Chairman Kuei Hsien-nung (桂先農) told a news conference.
The total amount of such investments will no longer be capped at US$500 million, as the Qualified Domestic Institutional Investor (QDII) scheme states, Kuei said.
However, the change will not lift investment quota restrictions barring Chinese from investing in Taiwanese stocks and fund products denominated in New Taiwan dollars, which are still subject to the QDII’s limit of US$1 million per person, the commission said.
As of the end of last month, about US$207 million of the US$500 million QDII quota had been used, the commission said.
Kuei said that Chinese are not limited in the amount of Taiwan-issued bonds and funds they can acquire, as long as they are not NT denominated.
There are no foreign-currency-denominated funds whose weighting of Taiwanese stocks exceeds 30 percent, a commission official said.
Nomura Asset Management Taiwan has submitted an application to add a foreign-currency-denominated share class for one of its products tracking Taiwanese stocks, the official said.
The commission had been hoping to implement the plan in January, aiming in particular at Chinese housewives who have large amounts of disposable cash and are keen to buy stocks overseas.
The goal was to boost turnover in the local equity market, which had been slow as many major market players had retreated from the trading floor.
However, the plan was put on hold until after the new government was sworn in on May 20 and it gained Cabinet approval on Thursday, Kuei said.
He said shareholders in companies on the local main board and over-the-counter market have no need to worry since the new measure will apply only to mutual funds and foreign currency-denominated bonds.
The commission, the central bank, the Ministry of Economic Affairs and the Mainland Affairs Council all agreed on the liberalization plan, Kuei said.
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