Taiwan Index Plus Corp., owned 100 percent by the Taiwan Stock Exchange (TWSE), is determined to encourage investors to participate in trading of exchange-traded funds (ETFs) and eventually boost transactions of such financial products.
Li Chi-hsien (???), chairman of Taiwan Index Plus, said that his company will continue efforts to compile and manage innovative indexes, a move that is expected to allow ETF issuers to come up with more products to track the new indexes and broaden the local ETF product portfolio.
Li said that Taiwan Index Plus will team up with the TWSE, which operates the local main board, to provide indexes related to corporate governance and other corporate social responsibilities, such as environmental protection.
He said that the presence of these innovative indexes are expected to show the strength of many large-cap stocks with sound fundamentals and attract investors to put their funds into ETFs, which track the indexes.
According to TWSE statistics, 310,000 retail investors and more than 3,500 institutional investors have participated in local ETF trading, up 28 percent and 52 percent, respectively, from 2003, indicating that enthusiasm in ETFs in Taiwan has been growing significantly.
Li said that the TWSE's efforts to further push for ETF trading could make the market more active.
In addition to moves to come up with more indexes for ETFs to track, Li said, the Financial Supervisory Commission (FSC), the top financial regulator in Taiwan, has eased rules governing risk-based capital ratios to allow local insurance companies to have more disposable funds to invest in stocks as well as ETFs.
Li said that these efforts are expected to help the local equity market build a better investment environment for ETFs.
By taking advantage of the government's push for ETF development, several asset management firms in Taiwan, such as Cathay Securities Investment Trust and Yuanta Securities Investment Trust, have issued ETFs to track the FTSE TWSE Taiwan 50 Index, and each of the ETFs are worth more than NT$80 billion (US$2.55 billion).
In addition, other securities investment firms, including Fubon Asset Management, have issued EFTs denominated in the Chinese yuan, to tap the growing ETF market.
In the near future, Yuanta Securities Investment Trust is expected to issue an ETF to track the KOSPI 200 Index in the Korean Stock Exchange.
In Taiwan, where the number of senior citizens is on the rise, Li said, the presence of ETFs, which have a relatively low entry threshold, is expected to provide elderly investors with stable profits.
Source: Focus Taiwan News Channel