Taiwan to Let Funds Invest More in China Stocks

Taiwan's cabinet announced a plan on Thursday to raise the amount of assets that Taiwan mutual funds can invest in China stocks, the latest in a series of measures to further improve trade ties with China.


The Executive Yuan, Taiwan's cabinet, said in a statement that it would raise the percentage of assets that funds can invest in mainland Chinese stocks to 10 percent from the current 0.4 percent, and will also allow funds to put 100 percent of their assets in Hong Kong-listed H-shares and red-chip shares, up from the current 10 percent.

"The cabinet approved the plan today to help financial companies to expand in markets in China, Hong Kong and Macau," the statement said, without giving a time frame for the plan.

Late last year, Taiwan gave the go-ahead for onshore funds to invest in Chinese, Hong Kong and Macau stocks, as funds seek opportunities for better returns via some of the world's best-performing markets.

Meanwhile, the cabinet said it will examine the restriction on Chinese investors investing in Taiwan stocks.

The Financial Supervisory Commission (FSC), Taiwan's top financial regulator, told Reuters in June that Taiwan was aiming to allow China's qualified institutional investors to invest in Taiwan stocks and mutual funds by the end of next year.

The month-old cabinet of new President Ma Ying-jeou approved last week a raft of reforms allowing greater investment by the island's financial firms in China, further opening the fast-growing mainland market to its brokerages, asset managers and others.

The new regulations are part of broader efforts by Taiwan to boost its economy through closer business ties with China.

China and Taiwan split after a civil war in 1949, and Taiwan has ruled itself since then, even though China still claims the island as part of its territory.

China has been the favourite overseas destination of Taiwan manufacturers, which have pumped more than $100 billion into mainland investments over the last 20 years, drawn by cheaper labour and land costs and strong growth rates.