Mainland China’s ICBC Credit Suisse Asset Management Co. Ltd. recently completed its registration with the Taiwan Stock Exchange Corp. for equity investment in Taiwan, according to an unnamed official familiar with the issue.
So far three mainland qualified domestic institutional investors have completed their registrations with the TWSE after the government opened the securities market to such investors in 2009. China Asset Management Company and Shanghai International Fund Management Co. Ltd. have both invested in the local stock markets.
The official pointed out that according to existing rules, mainland QDIIs can invest up to a combined total of US$500 million in Taiwan’s bourse, with each individual QDII’s investment capped at US$80 million.
Recent rallies in the local bourse have inspired interest from some mainland QDIIs to take part in the action and ask for further easing on the investment cap, the source revealed.
However, so far combined net inflows of funds from mainland QDIIs have barely breached the US$100 million mark, far less than the current regulatory cap. The Financial Supervisory Commission and the Central Bank of the Republic of China will continue to monitor developments, the official said.
The central bank has been taking measures to counter currency speculation following vast inflows of foreign funds into Taiwan. The central bank’s attitude will be a key factor if and when local authorities consider a policy change, market insiders pointed out.
CBC Deputy Governor Chou A-ting declined to elaborate on the agency’s stance on the matter, saying that the CBC has not received any inquiries from the FSC.
Market sources said the CBC is inclined to support regulatory easing provided that mainland funds are intended for equity investment on the island. “The key is whether such a move is necessary,” sources said.
Another reason that the CBC is not opposed to further easing is that mainland funds have not, as many had expected, created a significant impact on the stability of the local foreign exchange market, they added. (SFC-HZW)