Stock Connect

Taiwan Stock Exchange wants Hong Kong investors but has no plans for a stock connect scheme

Taiwan bourse set to link up with Singapore Exchange to allow easier access to city-state’s market

PUBLISHED : Sunday, 13 March, 2016, 8:06pm
UPDATED : Sunday, 13 March, 2016, 10:07pm

The Taiwan Stock Exchange wants to see more trading from Hong Kong investors but has no plans to establish a stock connect link with the local exchange, a senior executive said last week.

Huang Naikuan, the Taiwanese exchange’s senior executive vice-president and chief information officer, was in Hong Kong on a road show to meet institutional investors and promote the island’s technology sector.

“Hong Kong’s stock market is strong in the financial industry, while the Taiwan Stock Exchange has more technology companies and electronic vehicle firms,” he said. “The Taiwan market would provide a lot of choice for Hong Kong investors.”

He said the Taiwan Stock Exchange would set up a link up with Singapore Exchange (SGX) from the second quarter of this year, but there were no such plans for a link with Hong Kong Exchanges and Clearing (HKEx).

We do not need to set up a stock connect to promote cross-border trading between Hong Kong and Taiwan
Huang Naikuan, Taiwan Stock Exchange

“It’s not really necessary to have such a link up because there is a lot of cross-border trading between the Hong Kong and Taiwan markets already,” he said.

Almost all the major Taiwanese brokers had offices in Hong Kong to help Taiwanese investors trade Hong Kong stocks, he said. Likewise, there were many Hong Kong investors trading Taiwanese stocks through the same brokers.

Hong Kong was among the top five foreign sources of investment in Taiwanese stocks, he said. Foreign investors, including those from Hong Kong, represented 28.4 per cent of the Taiwan exchange’s turnover last year, and held 36.7 per cent of the total value of shares on the Taiwan market.

“We do not need to set up a stock connect to promote cross-border trading between Hong Kong and Taiwan,” Huang said. “We do, however, need to link up with other markets to encourage more cross-border trading.”

Unlike the stock connect scheme between Hong Kong and Shanghai, which features two-way investment flows, the planned Taiwan-Singapore tie-up would be one way only, allowing Taiwanese brokers to more easily and cheaply trade Singapore stocks for Taiwanese investors.

“It is one way only and we will consider the other leg in future,” Huang said. “We will also consider establishing similar link-ups with the stock exchanges of Japan and South Korea.”

He said the Taiwan Stock Exchange was also promoting exchange-traded-funds (ETFs) tracking major foreign indices, which would be an easy way for Taiwanese investors to invest in overseas markets.

The Taiwan Stock Exchange relaxed its stock borrowing and lending to sovereign funds, large pension funds and hedge funds from last month to encourage more institutional investors to trade in the Taiwanese market.