Taiwan can outperform Hong Kong, Singapore and Shanghai to become a regional financial hub if the local bourse manages to attract listings from Chinese companies, analysts said yesterday.
“If small and medium-sized Chinese companies can be listed [on the Taiwan Stock Exchange], Taiwan will definitely be attractive to most Chinese-speaking companies and [the bourse] would become the NASDAQ of Asia,” Polaris Securities Co (寶來證券) vice chairman Huang Chi-yuan (黃齊元) told a seminar in Taipei yesterday. “Taiwan is now an undervalued equity.”
Huang said Array Inc (安瑞科技), which was listed on the GRETAI Securities Market on Wednesday, was one of the first Chinese-owned technology companies to test the waters in the local bourse.
Taiwan should also take advantage of its newly won “peace dividends” from growing ties with China and transform itself into a management hub for multinationals, a regional talent incubator and an experimental house for financial innovative capabilities in the region, he added.
Du Ying-tzyong (杜英宗), chairman of Citibank Taiwan’s global investment banking in the Asia-Pacific region, said at the seminar that Taiwan should in the near term consider cooperation with the Shanghai stock exchange on dual listings of public companies, which is “a more feasible” way to strengthen the local capital market.
Du said he was less optimistic about Shanghai’s goal of becoming a regional financial hub by 2020, since China’s society was not open enough and lacked financial transparency and rule of law.
Following a recent rally on the TAIEX weighted index, both Du and Huang yesterday warned that the nation’s economic fundamentals in the second half of the year remained opaque, which could be bad news in terms of the local bourse’s future momentum, despite accelerated cross-strait trade links.
“The recent rally is purely a result of ample liquidity,” Du said. “Without a bolster from solid economic fundamentals, the TAIEX’s prospects in the second half may not be promising.”
Du and Huang agreed that after Morgan Stanley Capital International this week increased its weighting of Taiwanese shares in its equity indexes, a capital inflow of between NT$200 billion (US$6 billion) and NT$600 billion on the local bourse was likely in the near future.
Du urged the domestic banking sector to accelerate its consolidation.
He advised the government to encourage mergers and acquisitions between state-run banks while enticing private financial institutions to assimilate private rivals.
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