Taiwan's Cabinet has approved a plan to ease restrictions on the purchase of mutual funds and bonds by Chinese investors, the Financial Supervisory Commission (FSC) said Thursday.
The FSC will now come up with measures to complement the market liberalization, which it hopes will take effect within three months, according to FSC Vice Chairman Kuei Hsien-nung (???).
Under the FSC plan, Chinese entities with investments in Taiwan and Chinese retail investors who have Taiwan residence permits will be allowed to buy Taiwan dollar and foreign currency denominated mutual funds and foreign currency denominated bonds listed on the local market, Kuei said.
In addition, Chinese nationals who have Taiwan residence permits, including tourists, will also be allowed to buy mutual funds and foreign currency denominated bonds in Taiwan, Kuei said.
The mutual funds available to Chinese retail investors and institutions will include exchange-traded funds (ETFs) which have been gaining popularity in the local equity market in recent sessions, he said.
Kuei said Chinese retail investors who do not have residence permits and are not in Taiwan will not be allowed to buy Taiwan dollar denominated mutual funds.
However, they will be allowed to buy foreign currency denominated mutual funds and bonds in the local equity market by placing orders from overseas, he added.
The FSC had been hoping to implement the plan in January, aiming in particular at Chinese housewives who have large amounts of cash and are keen to buy stocks overseas.
The goal was to boost turnover in the local equity market, which had been slow as many major market players had retreated from the trading floor.
However, the plan was put on hold until after the new government was sworn in May 20 and it gained Cabinet approval on Thursday, Kuei said.
He said shareholders in companies on the local main board and over-the-counter market have no need to worry since the new measure will apply only to mutual funds and foreign currency-denominated bonds.
The FSC, the central bank, the Ministry of Economic Affairs, and the Mainland Affairs Council all agreed on the liberalization plan, according to Kuei.
Source: Focus Taiwan News Channel