As an integral part of the ROC government's plan to lay the foundations for Taiwan's prosperity in the 21st century, the island's new-look market will be created once the Legislature greenlights integrating TWSE, Taiwan Futures Exchange, GreTai Securities Market and Taiwan Depository & Clearing Corp. This move is in response to investor demands for a lowering of costs and the creation of a larger, more efficient trading platform. The overriding goal of the merger is to attract more investment from abroad by making it cheaper to buy and sell shares, while also aiming for cross-shareholdings with foreign bourses.
With TWSE expecting the integration to be completed in two phases, the first of which would see the formation of the new entity's holding company by early next year, the move is seen by many as a key component in Taiwan's transformation into a regional financial hub. While the idea had been mooted under the previous administration in 2006, it was viewed by the industry as pointless given that the island's companies continued to be hamstrung by rules restricting them from investing more than 40 percent of their net worth in mainland China.
But following the government's announcement July 17 that the ceiling on mainland China-bound investments would be raised to 60 percent for most companies in Taiwan, the shackles were removed and the island's bourse merger is now the missing piece of Taiwan's investment puzzle.
Another measure designed to further boost TWSE's potential as a mechanism to attract overseas capital was the Nov. 13 launch of the Taiwan Shariah Index in conjunction with FTSE Group, a leading global index provider. The arrangement will see 68 of the island's leading Shariah-compliant companies listed for investment in by an estimated 1.3 billion Muslims worldwide. This will allow Taiwan to access the market for Islamic investment products, which is touted by analysts as one of the fastest growing new areas of finance globally.
For ROC President Ma Ying-jeou's goal of steering Taiwan toward becoming a financial center for the Asia-Pacific region to be realized, such stock market initiatives are par for the course. A revamped TWSE not only creates additional wealth, but reaffirms the government's credentials for economic management.
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