Cross-Straits stock connect scheme also a possibility in future: CSRC
Taiwan investors may have more opportunities to invest in the Chinese mainland's financial market through the Renminbi Qualified Foreign Institutional Investor (RQFII) program or a potential Shanghai-Taiwan stock connect scheme, a top official from China's top securities regulator said in Taipei on Wednesday.
Taiwan financial institutions will be able to invest in the mainland's capital market under the RQFII program after the Cross-Strait Service Trade Agreement (CSSTA) is carried out, Jiang Yang, vice chairman of the China Securities Regulatory Commission (CSRC), said at a financial summit in Taipei on Wednesday, according to a statement on CSRC's website.
CSSTA, a cross-Straits economic pact aimed at liberalizing service trade, was signed by the mainland and Taiwan in June 2013 but it has yet to come into effect because it has not been ratified yet in Taiwan.
When the CSSTA is implemented, the mainland will also further facilitate Taiwan brokers to apply for the Qualified Foreign Institutional Investor (QFII) program and increase their share in joint ventures set up in the mainland, according to Jiang.
The mainland has fulfilled a promise made in the Economic Cooperation Framework Agreement to facilitate qualified Taiwan financial institutions in applying for the QFII program, Jiang said, noting as of the end of March, 30 Taiwan financial institutions are licensed to join QFII with a quota of $6.67 billion.
Although the implementation of the CSSTA has been halted, the growing economic ties between the two sides is irreversible, Li Daxiao, director of research with Shenzhen-based Yingda Securities Co, told the Global Times Wednesday.
The RQFII program is part of mainland efforts to push ahead the internationalization of the yuan and offers a good channel for Taiwan's institutional investors to invest in the mainland's capital market, Dong Dengxin, director of the Financial Securities Institute of Wuhan University of Science and Technology, told the Global Times Wednesday.
Taiwan is an open market and a lot of the island's institutional investors come from overseas with advanced investment concepts so introducing Taiwan's institutional investors to the mainland's capital market will help the mainland's institutional investors become more mature, Dong said.
Jiang also said CSRC is looking into launching a potential Shanghai-Taiwan stock connect scheme, Taiwan-based newspaper Economic Daily News reported on Wednesday.
Jiang stressed that CSRC will support any cooperation between the two sides but for the Shanghai-Taiwan stock connect scheme the prerequisite is whether Taiwan will want it, the report said.
Taiwan authorities responded that there must be a consensus achieved in Taiwan before further development, according to the report.
The launch of a Shanghai-Taiwan stock connect scheme will expand mainland investors' investment channels, offer them more options in investing in overseas markets and allow them to diversify their investment risks, Dong said.
