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Talk of the Day -- News digest of local media -- MOU takes effect

Talk of the Day -- News digest of local media -- MOU takes effect

With the implementation of a cross-Taiwan Strait memorandum of understanding (MOU) Jan. 16, Taiwan is opening its equity markets to China's qualified domestic institutional investors (QDIIs), but there are still restrictions, and the QDIIs are barred from investing in the shares of companies in such sectors as civil aviation, air cargo, securities and futures, private security, construction, real estate brokerage, television and radio broadcasting, and telecommunications.
While total investment by China's QDIIs in Taiwan's stock market is limited to US$500 million, Chinese investors, either individually or as a group, are not allowed to hold more than 10 percent of the stake of any listed and over-the-counter companies.
The following are excerpts from some local media reports on the issue: China Times: It is worth noting that China's QDIIs are more interested in Taiwan's high-tech sector than other sectors. The Financial Supervisory Commission (FSC) originally planned to set a stakeholding limit by Chinese QDIIs of chip or plastic flat panel display manufacturing companies. After consulting with the Ministry of Economic Affairs, the FSC decided that there is no need for more restrictions in this regard.
The government has approved two Chinese QDIIs -- China AMC and the China International Fund Management Company -- to invest in Taiwan's equity markets. Since the cap is much lower than the US$30 billion originally anticipated by the market, the opening might only have a minor impact on Taiwan's stock market, according to a fund manager for Mega Funds.
United Daily News: Lee Chi-Hsien, director-general of the Securities and Futures Bureau under the Financial Supervisory Commission, confirmed Friday that The Taiwan Stock Exchange has been keeping close watch on some Chinese investors who have sought to invest in Taiwan's equity markets by way of foreign institutional investors (FINIs).
Lee said some foreign investors submitting applications to the FSC for approval have been found to be overseas funds controlled by Chinese investors, and therefore had their applications rejected. In case an overseas investor has entered the equity market in the name of an FINI and hopes to convert into a QDII in the future, it must follow the regulations for QDIIs.
Meanwhile, a market source has suggested that a private equity fund, Shanghai International Shanghai Growth Investment Ltd., has managed to enter the Taiwanese markets under the cover of a FINI.
A QDII fund manager in China has commented that before the cross- strait MOU took effect, some Chinese investors had already made inroads into Taiwan via a detour through Hong Kong.
Commercial Times: With the implementation of the cross-strait MOU, two approved QDIIs from China are prepared to invest in the Taiwan stock market from next Monday.
Although the Financial Supervisory Commission had originally proposed to set the ceiling for total investment by China's QDIIs in Taiwan's stock market at US$1 billion, Premier Wu Den-yih accepted the suggestion of Central Bank of the Republic of China (Taiwan) Governor Perng Fai-nan to set the limit at US$500 million for the sake of market stability in the wake of the opening.
(By Lillian Lin)