Taiwanese financials aim at China
Financial funds boom in anticipation that Taiwanese banks and insurers will reap profits in mainland China.
Susan Chang, vice chairwoman at the Financial Supervisory Commission in Taiwan, says the regulator plans to relax investment restrictions for Taiwanese banks. The new announcement may come before next monthÆs presidential election on March 22, 2008. Taiwanese banks will be allowed to invest in Chinese shares through an overseas representative under the scheme.
Details of the new scheme have yet to be clarified. But the scheme will meet a long anticipated goal among Taiwanese financial institutions to invest in Hong Kong and mainland stocks.
Xav Fung, research manager at Lipper in Taipei, says equity funds investing in local financial stocks have performed well in anticipation of deregulation; finance stocks gained 7.03% in January, the only sector to post gains amidst a general sell-off on the Taiwan Stock Exchange.
ChangÆs comments followed the Democratic Progressive Party (DPP) candidate Frank HsiehÆs pledge to end all China-related investment restrictions on February 1, 2008. In his pitch, he says the investment ceiling will be removed upon his election and Taiwanese banks will be allowed to expand in mainland China. Previously, mainland-related investments, including those listed in Hong Kong, were restricted to 40% of a bank's total assets under management.
HsiehÆs opponent Ma Ying-jeou of the Chinese National Party, or the Kuomintang (KMT), has also expressed a similar intention to ease cross-strait investments and trades.
Taiwanese investment managers have suffered from missing out on access to the booming mainland economy because of Taipei's investment caps. The China A-share market measured by the CSI 300 index gained 165.55% in 2007, although shares have subsequently fallen nearly 15% this year.
Partly in response to the investment restrictions, Taiwan's banks set up overseas operations that could offer mainland-related investments to clients. Fubon Bank acquired Hong Kong's International Bank of Asia in 2004. Polaris Financial Group, which runs the island's fourth-largest fund company, has a securities brokerage arm in Hong Kong.
Of the insurance companies, Cathay Financial, the largest in Taiwan, has an insurance-related JV with China Eastern Airlines in Shanghai, while Shinkong Financial has received Beijing's approval to form a similar JV with Hainan Airlines. Even small players like Taiwan Life Insurance are making inroads, with Taiwan Life investing $33 million in a JV with Xiamen C&D.
Analysts expect more direct investments to follow the FSC's easing rules for financial companies.
Details of the new scheme have yet to be clarified. But the scheme will meet a long anticipated goal among Taiwanese financial institutions to invest in Hong Kong and mainland stocks.
Xav Fung, research manager at Lipper in Taipei, says equity funds investing in local financial stocks have performed well in anticipation of deregulation; finance stocks gained 7.03% in January, the only sector to post gains amidst a general sell-off on the Taiwan Stock Exchange.
ChangÆs comments followed the Democratic Progressive Party (DPP) candidate Frank HsiehÆs pledge to end all China-related investment restrictions on February 1, 2008. In his pitch, he says the investment ceiling will be removed upon his election and Taiwanese banks will be allowed to expand in mainland China. Previously, mainland-related investments, including those listed in Hong Kong, were restricted to 40% of a bank's total assets under management.
HsiehÆs opponent Ma Ying-jeou of the Chinese National Party, or the Kuomintang (KMT), has also expressed a similar intention to ease cross-strait investments and trades.
Taiwanese investment managers have suffered from missing out on access to the booming mainland economy because of Taipei's investment caps. The China A-share market measured by the CSI 300 index gained 165.55% in 2007, although shares have subsequently fallen nearly 15% this year.
Partly in response to the investment restrictions, Taiwan's banks set up overseas operations that could offer mainland-related investments to clients. Fubon Bank acquired Hong Kong's International Bank of Asia in 2004. Polaris Financial Group, which runs the island's fourth-largest fund company, has a securities brokerage arm in Hong Kong.
Of the insurance companies, Cathay Financial, the largest in Taiwan, has an insurance-related JV with China Eastern Airlines in Shanghai, while Shinkong Financial has received Beijing's approval to form a similar JV with Hainan Airlines. Even small players like Taiwan Life Insurance are making inroads, with Taiwan Life investing $33 million in a JV with Xiamen C&D.
Analysts expect more direct investments to follow the FSC's easing rules for financial companies.
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