For localádistributors and manufacturers of investment products in Taiwan, the most important headline number is a recent estimate by the Central Bank of China, Taiwan's central bank, that domestic investors sent over NT$1 trillion ($30.9 billion) offshore over the course of 2005 - while the domestic unit trusts industry remained flat.
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This, coupled with more intense competition from foreign fund managers and service providers onshore or selling products domestically from offshore, has convinced some Taiwanese firms that in order to grow their business, they need to target non-resident Taiwanese.
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Fubon Bank is at the forefront of this move, and is looking to expand its modest presence in Hong Kong into a full-service investment manager and distributor of offshore product to Taiwanese. "We hope to be a regional player," says Michael Ding, chief economist at Fubon Bank in Taipei.
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A few years ago, Fubon acquired Hong Kong's International Bank of Asia (IBA), which it rebranded as Fubon Bank (Hong Kong) last year. This entity, run by local president and CEO Lee Jinyi,áretains its listing on the Hong Kong stock exchange and is a member of Cepa, Hong Kong's trade agreement with mainland China. This year, Fubon Bank (HK) is starting to target Taiwanese businessmen operating on the mainland.
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The bank now has a license to distribute investment products, and the next step will be to launch its own set of Hong Kong-registered mutual funds by the end of this year. To do this, however, the bank needs to hire marketing, business development and investment management professionals. "We need to find talent and build our back office, our IT, and the infrastructure for asset management," says Ding.
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Fubon may be the first but it probably won't be the last. Industry executives in Taipei say a number of other firms are looking to set up in Hong Kong or other centres to capture non-resident Taiwanese money. Polaris Investment Securities Trust, for example, has a brokerage office in Hong Kong that could be used to introduce investment products to traveling Taiwanese, says executive vice president Patrick Wong. "We'll need to obtain an asset management license soon," he adds.
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