Taiwan is the third most active securitized derivatives market in Asia following Hong Kong and South Korea, according to Taiwan Stock Exchange Corp. July 3.
Based on the latest statistics released by Paris-headquartered World Federation of Exchanges, Taiwan’s turnover of US$4.31 billion for the first five months of the year is the eighth highest in the world.
“Taiwan maintained its third place ranking in Asia from 2011 and is closing the gap on South Korea,” a TWSE official said. “For the same period, South Korean turnover dropped from seven times that of Taiwan to 2.7.”
The official said the local market’s prospects look bright, forecasting a positive impact from amendments to the Securities Transaction Tax Act, which are pending legislative review.
The changes, which will slash the transaction tax rate from 0.3 percent to 0.1 percent for derivatives trading, is expected to be a key factor in promoting local authorities to allow day trading in Taiwan.
Day trading accounts for 80 percent of transactions in Hong Kong and South Korea, the official said. “We expect daily turnover in Taiwan to triple when such an option becomes available to investors. This should help push the country into second place behind Hong Kong.”
Taiwan’s derivatives market has grown steadily since 2009, and was relatively stable when securities trading dropped 23 percent last year after the Ministry of Finance proposed reintroducing a securities gains tax.
As of the end of May, the daily average turnover was NT$1.3 billion (US$59 million), topping NT$1.1 billion and NT$900 million registered in 2011 and 2012, respectively.
Taiwan’s thriving financial sectors are also boosted by local investors’ advanced financial knowledge. According to the Mastercard Index of Financial Literacy released July 3, Taiwan ranked third among 27 Asian countries following New Zealand and Singapore.
First conducted in 2010, the annual index polls consumers aged 18-64 on basic money management skills, financial knowledge and investment planning. (JSM)
Write to Meg Chang at sfchang@mofa.gov.tw