The Dutch pension asset manager's Asia Pacific head of real estate says his team has just had one of its busiest years ever and that 2021 is looking similarly promising.
The rules will likely change how fund players do business in Taiwan, while bringing the islandÆs competitiveness on a par with other ETF hotspots such as Hong Kong and Tokyo.
Most importantly, the FSC will begin recognising foreign jurisdictions for funds that are registered overseas. Effectively that means fund houses with ETFs that are already registered abroad will no longer need to seek the FSCÆs nod before offering their products to Taiwan investors.
The FSC has also simplified trading rules for overseas-listed ETFs. A master agent is no longer needed for onshore subscription and redemption activities.
Meanwhile, master agents representing the issuing houses will be waived from payments of guarantee deposits and the provision of translated copies of fund prospectus to the Taiwan stock exchanges. However, master agents will be required to make half-yearly reports available to investors from now on, and are still forbidden from offering ETFs linked to gold, commodities or real estate.
According to the international division of the FSC in Taipei, the regulator is close to signing a memorandum of understanding with Hong KongÆs Securities & Futures Commission (SFC) in declaring mutual recognition of the SFCÆs rulings. ETFs already approved by the Hong Kong regulator will be given automatic visa-free status in Taiwan.
Today, there are 11 ETFs available to Taiwanese investors, with total assets of about $2.3 billion. Considering TaiwanÆs fund market is a $63 billion business, it accounts for just under 4% of the entire market û a small figure when compared to other neighbouring hubs, such as Japan which has $33 billion in ETFs or Hong Kong which has $11.3 billion.
Xav Feng, head of research for Taiwan and China at Lipper in Taipei, says the revision will be a key step in bringing TaiwanÆs ETF development up to speed, in line with other Asian financial centres. Yet most importantly, he sees the deregulation as a further step in the normalisation of cross-strait relations and a tool to attract TaiwanÆs offshore investments back to the island.
Joseph Ho, head of ETFs at Lyxor Asset Management in Hong Kong, anticipates the rules will bring much needed change to TaiwanÆs ETF market. He says growth in cross-listing activities has been stifled by regulatory complications in the past. He says while most institutional investors on the island are already consummate users of ETFs, the retail market remains the biggest untapped market in Asia.
Taiwan is set for a more vibrant scene, but Ho notes settlement differences between Taiwan and other fund markets can be a challenge. As an example, he says Hong Kong operates on a T+3 settlement cycle, whereas Taiwan operates on a shorter timeframe of T+2. This makes settling a cross-listed fund impossible, and is a small but important detail that needs to be worked out.
Overall, he does not see overseas fund houses posing a threat to local fund businesses in Taiwan. Local players are the best at offering Taiwanese products, he says, while offshore players will be competing in a different niche.
Mega players Nippon Life and Dai-ichi Life are looking for opportunities in higher-yield single-A US corporate bonds, which offer more appealing yields than stagnant domestic offerings.
The “lower for longer” monetary policy and stimulus packages, coupled with the rolling out of vaccine programmes favorably support real estate investing in the region, with offices and data centres presenting forward-looking opportunities.
As US fixed income default rates rose and yields fell during the pandemic, are Asian bonds, which have had more stable yields through 2020, looking more attractive?
Insto roundup: Norway's Oil Fund praises China governance efforts; NPS commits $100m to taxi-hailing app
Norway's Oil Fund welcome Chinese proposals improving transparency and shareholder protection; HK's MPF assets surge 35% year on year; Korea's NPS commits $100m to TPG consortium to invest in taxi-hailing app; Poba commits W270bn to European property; Malaysia's EPF sees investment income rise 59% year-on-year in first quarter, and more.