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Talk of the Day -- Taiwan bourse to open to qualified Chinese banks

2012/05/18 23:09:05

Taiwan will open its stock market to Chinese banks with QDII status later this year, Financial Supervisory Commission (FSC) Chairman Chen Yu-chang announced Thursday.

Local media reports said Chinese banks with QDII status can invest up to US$9.46 billion in overseas markets. Capital from Chinese banks could give a badly needed shot in the arm for the bearish local stock market, the reports said.

Chen just concluded a six-day visit to Beijing to attend an annul meeting of the International Organization of Securities Commissions (IOSCO).

During his stay in Beijing, Chen also met with heavyweights in China's financial and banking communities to exchange views on expansion of financial service market opening across the Taiwan Strait, media reports said.

The following are excerpts from the media coverage of cross-strait consensus reached during Chen's China visit:

Economic Daily News:

Chen said the third institutionalized meeting between financial supervisory bodies on both sides of the Taiwan Strait will take place in Taipei in the second half of this year.

During his stay in Beijing, Chen said he met with Guo Shuching, chairman of the China Securities Regulatory Commission, Xiang Junbo, chairman of the China Insurance Regulatory Commission and Shang Fulin, chairman of the China Banking Supervisory Commission, for wide-ranging talks.

In his talks with Shang, Chen said they agreed to speed up completion of screening of cases involving cross-strait financial exchanges or supervisory cooperation.

Both sides will also further discuss how to define Taiwanese-funded companies in China, Chen said. The definition is critical to decide the scope of Taiwanese banks' business operations in China.

The two sides will also promote the signing of a memorandum of understanding (MOU) on cooperation in surpevising QDII (qualified domestic institutional investors) operations and forge a contact mechanism, Chen said, adding that once the MOU is signed, Chinese banks with QDII status will be allowed to invest in Taiwan's stock market.

At present, Chen said, only 10 countries, including the United States and Japan, have signed such an agreement with China.

China's securities brokerages with QDII status have invested some US$200 million in the local stock market, far below the US$500 million ceiling. (May 18, 2012).

Commercial Times:

Kuei Hsien-nung, director-general of the FSC's Banking Bureau who accompanied Chen on the Beijing visit, said China's banking regulatory chief did not oppose the proposal that Taiwanese banks set up subsidiaries in China or set up branches in China's rural townships.

As China allows foreign investors to control up to 100 percent stakes in rural township banks, some local banks have expressed interest in relevant investment projects, Kuei said.

Responding to FSC Chairman Chen's promise to speed up liberalization of cross-strait financial exchanges, foreign institutional investors said they expect share prices of financial stocks to rebound soon. (May 18, 2012).

(By Sofia Wu)