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This weekÆs stop was Hong Kong. Led by senior executive vice-president Michael Lin and senior vice-president of the trading department May Yu, the TWSE met with companies and investors to talk about recent market reforms, the potential for improvement with relations with China, and the recent recovery of share prices.
Since December last year, the TWSE has visited Dubai, Vietnam, Bangkok and Kuala Lumpur. Last week, the team was in London. After Hong Kong, the next stop is Singapore.
The merit of listing in Taiwan wasnÆt such a hard sell in Hong Kong. After all, the Taiwan benchmark index, the Taiex, is up 2.7% so far this year. Not particularly impressive on its own, but much better than the Hong Kong market's performance. Hong KongÆs benchmark Hang Seng Index is down 12.8%.
Sentiment for Taiwan shares has been improving since early 2008, when investors started to appreciate undervalued stocks in that market. It has helped greatly that the new government has been able to keep the momentum going.
Failing to get a visa in time, TWSE chairman Rong-I Wu had to make his pitch at a media roundtable in Hong Kong remote from Taipei. He notes that TaiwanÆs stock market is made up of "well-established companies with excellent managementö. More interestingly, he stresses the significant investment and exposure of Taiwan-listed companies to high-growth markets such as mainland China and emerging markets.
The connection to China has been surfacing more frequently since the victory of the Kuomintang (KMT) or Nationalist Party in the March presidential elections in Taiwan. President Ma Ying-jeou has offered to reopen dialogue with China, which claims the island as its territory, while promising to maintain self-rule and a distinct international profile.
ôThe new governmentÆs policy towards China is more open, which may further improve the trading relationship between Taiwan and China,ö Wu says.
More to the point, the TWSE highlights what it has done to facilitate investment and trading in Taiwan. It notes that it has pushed forward reforms to improve its trading infrastructure for foreign investors. These reforms include relaxation of rules on off-exchange transactions, stock lending, free delivery settlement and short sales û all of which are aimed at improving liquidity, lowering trading costs and raising market efficiency. More reforms are expected, the exchange says.
The TWSEÆs visits to various markets like Hong Kong are in line with efforts to actively build closer links with investors and let them know about the improvement in TaiwanÆs trading environment.
The total value of securities borrowing and lending trading has jumped to $9 billion in 2007 from $2.5 billion in 2004, and the number of transactions has nearly doubled to 2,799 orders over the same period, thanks to a series of reforms that simplified the trading process.
The TWSE has also fought to eliminate double taxation on manufactured dividends to lower trading costs for international investors.
The Securities and Futures Bureau has already agreed to a proposal that securities need not be delivered to the broker before the borrower can short sell the securities as long as the lent securities can be delivered on the following day. The TWSE says it is now working with market participants on the operational details.
The original up-tick rule for short selling has been exempted for a wider range of stocks since November 2007. Now, constituent stocks of the Taiwan Mid-Cap 100 Index and the Technology Index are also exempted, pushing the percentage of exempted stocks to 84% of the total market capitalisation.
Resulting in more convenience for off-exchange transactions, an additional morning trading session was put in place in April for a 30-minute block trading. The TWSE says it will propose to prolong the trading hours for off-exchange transactions, allowing block trading to be processed any time from 9am to 5pm.
Founded in 1961, TWSE works with the Financial Supervisory Commission to regulate Taiwan's stock market, enhance market transparency and improve market infrastructure. It currently offers trading markets for stocks, warrants, exchange-traded funds, Taiwan Depository Receipts and corporate bonds.
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