Taiwan and China are planning to permit trading of each other’s shares for the first time as ties improve.
A so-called trading platform may list as many as 30 stocks from each market, Taiwan Stock Exchange chairman Schive Chi (薛琦) said. Investors are currently restricted from directly investing in each other’s equities. An agreement on the dual listing of exchange-traded funds (ETFs) is also expected this year, he said.
“It will be a step further,” Chi said in an interview on Monday. “Instead of trading exchange-traded funds, it will be trading individual stocks.”
“Investors will definitely be interested” in the cross-trading of China and Taiwan stocks, said Monika Yang, who helps oversee US$10 billion at Hamon Asset Management Ltd in Hong Kong. “Investors have a wider variety of shares to trade in. Chinese investors will want to diversify their investment and this is a good way for Taiwan investors to buy Chinese shares.”
Taiwan is also trying to draw as many as 37 Taiwanese-owned companies listed in Hong Kong back to its exchange, Chi said. A separate agreement on so-called ETFs with Hong Kong may be completed by next month, he said.
Taiwan and China plan to sign an accord on financial services and a cross-currency settlement system, officials said last month. China’s currency isn’t fully convertible, and the country limits foreign ownership of shares traded on its exchanges.
Allowing cross-trading of Chinese and Taiwanese shares may draw investors away from Taiwan, said Jason Huang, a fund manager at Paradigm Asset Management (華頓證券投信) in Taipei, who helps oversee more than US$200 million.
China’s shares are valued at US$2.6 trillion, the world’s third-largest stock market, according to Bloomberg data. Taiwan’s market is worth 20 percent of that, the data show. Daily trading of Chinese stocks averaged at US$22.5 billion in the past six months, compared with Taiwan’s US$2.7 billion.
“If Chinese stocks are traded in Taiwan, there could be a chance investors will choose to buy only Chinese stocks, marginalizing Taiwan shares,” Huang said.
Taiwan’s share rally may have outpaced share value as companies had not seen the benefits of potential links with China, Mark Mobius, who helps oversee US$20 billion in emerging-market assets at Templeton Asset Management Ltd, said earlier this month.
ADVANCED: Previously, Taiwanese chip companies were restricted from building overseas fabs with technology less than two generations behind domestic factories Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), a major chip supplier to Nvidia Corp, would no longer be restricted from investing in next-generation 2-nanometer chip production in the US, the Ministry of Economic Affairs said yesterday. However, the ministry added that the world’s biggest contract chipmaker would not be making any reckless decisions, given the weight of its up to US$30 billion investment. To safeguard Taiwan’s chip technology advantages, the government has barred local chipmakers from making chips using more advanced technologies at their overseas factories, in China particularly. Chipmakers were previously only allowed to produce chips using less advanced technologies, specifically
The New Taiwan dollar is on the verge of overtaking the yuan as Asia’s best carry-trade target given its lower risk of interest-rate and currency volatility. A strategy of borrowing the New Taiwan dollar to invest in higher-yielding alternatives has generated the second-highest return over the past month among Asian currencies behind the yuan, based on the Sharpe ratio that measures risk-adjusted relative returns. The New Taiwan dollar may soon replace its Chinese peer as the region’s favored carry trade tool, analysts say, citing Beijing’s efforts to support the yuan that can create wild swings in borrowing costs. In contrast,
VERTICAL INTEGRATION: The US fabless company’s acquisition of the data center manufacturer would not affect market competition, the Fair Trade Commission said The Fair Trade Commission has approved Advanced Micro Devices Inc’s (AMD) bid to fully acquire ZT International Group Inc for US$4.9 billion, saying it would not hamper market competition. As AMD is a fabless company that designs central processing units (CPUs) used in consumer electronics and servers, while ZT is a data center manufacturer, the vertical integration would not affect market competition, the commission said in a statement yesterday. ZT counts hyperscalers such as Microsoft Corp, Amazon.com Inc and Google among its major clients and plays a minor role in deciding the specifications of data centers, given the strong bargaining power of
TARIFF SURGE: The strong performance could be attributed to the growing artificial intelligence device market and mass orders ahead of potential US tariffs, analysts said The combined revenue of companies listed on the Taiwan Stock Exchange and the Taipei Exchange for the whole of last year totaled NT$44.66 trillion (US$1.35 trillion), up 12.8 percent year-on-year and hit a record high, data compiled by investment consulting firm CMoney showed on Saturday. The result came after listed firms reported a 23.92 percent annual increase in combined revenue for last month at NT$4.1 trillion, the second-highest for the month of December on record, and posted a 15.63 percent rise in combined revenue for the December quarter at NT$12.25 billion, the highest quarterly figure ever, the data showed. Analysts attributed the
RSS