Taiwan’s government agreed to widen Chinese investor access to local mutual funds, taking a step toward improving financial ties with the mainland.
Chinese visitors, citizens residing in Taiwan and mainland companies registered in the island will be allowed to invest in domestic funds, Financial Supervisory Commission Vice Chairman Kuei Hsien-nung said at a press briefing Thursday. Mainland investors wanting to buy such funds without visiting the island will be limited to those denominated in currencies other than the Taiwanese dollar. The new policies won’t require legislative approval and could be implemented as soon as in three months, he said.
The approval comes at a time when Taiwan’s ties with its largest trading partner face challenges amid President Tsai Ing-wen’s refusal to endorse the one China doctrine. The move will provide mainland investors greater access to the island’s $961 billion equity market, including some of the world’s biggest semiconductor companies and electronics assemblers such as Taiwan Semiconductor Manufacturing Co. and Hon Hai Precision Industry Co.
“This is Taiwan government’s positive response to China,” said Tsung Sheng Liu, President of Yuanta Securities Investment Trust Co. in Taipei, who described the cabinet’s approval as a sign of goodwill. “Taiwan’s equity market also has many high-dividend stocks and companies like TSMC and a cluster of semiconductor firms, which are a bit rarer in China. So for mainland investors’ portfolios, there will be complementary features.”
Tsai, who took office in May after being elected president of Taiwan’s 23.5 million people, has said she will seek peaceful ties with China while resisting pressure to acknowledge the idea that they are part of a single nation.
Chinese investors, including visitors and non-visitors, were also approved to invest in non-Taiwan dollar-denominated bonds and funds, the FSC’s Kuei said on Thursday.
Taiwan’s benchmark Taiex index, which has jumped 8 percent this year after receiving more than $14 billion in foreign fund inflows -- the most among nine Asian markets tracked by Bloomberg -- fell 0.8 percent on Thursday. The local currency weakened 0.06 percent to NT$31.744 against the U.S. dollar as of 2:40 p.m.