Taiwan move to allow mainland listings hailed

PUBLISHED : Monday, 04 August, 2008, 12:00am
UPDATED : Monday, 04 August, 2008, 12:00am

Moves underway to allow mainland companies to list in Taiwan will be a win-win development for both markets, say analysts.

News of the development emerged in comments last week from Lee Jih-chu, vice-chairman of Taiwan's Financial Supervisory Commission (FSC).

'We are planning to allow mainland companies to list on the Taiwan Stock Exchange by the end of August at the earliest,' said Mr Lee.

A day after the announcement, Taiwan's Executive Yuan Council said companies already listed on other stock exchanges and with a stake of over 20 per cent held by mainland investors would be allowed to seek a listing on the Taiwan bourse, reversing a previous ban

'The plans now under consideration will financially bind the mainland and Taiwan more closely, while giving a boost to Taiwan's sluggish economy,' said International Finance Institute of Shenzhen University director Guo Shiping. 'At the same time, mainland companies will also be given access to new fund-raising opportunities. It will be a win-win scenario for both.'

Liu Tsung-sheng, chief executive of Polaris International Securities Investment Trust, said Taiwan 'should capture this good business opportunity.'

'We expect the mainland's top companies with global exposures to come into the market first,' said Mr Liu, who heads Taiwan's top asset management house. 'When it is combined with the upcoming QDII investment scheme, [Taiwan's] local market momentum and turnover will surely be driven up to a high level later.'

The FSC last week said that the mainland's qualified domestic institutional investor, or QDII, scheme could invest in the island's securities and futures market from October.

Michael Lin, senior executive vice-president of Taiwan Stock Exchange Corp, expressed enthusiasm about the prospect of mainland listings. 'We hope to see the issuance of A+T shares and even A+T+H shares in a near future,' he said.

But Mr Lin conceded that the mainland and Taiwan would need to work closely to overcome technical and policy barriers.

Mr Guo agreed: 'It will take time for the two to get the ball rolling and there will be unexpected problems and even difficulties, particularly in the early stages.'

Mr Guo said that privately owned mainland small- and medium-sized enterprises might be among those interested in listing in Taiwan. He said that compared with Hong Kong, Taiwan's listing criteria 'appeared to be more tolerant' and hence the entry would be comparatively easier.