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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: zonder who wrote (35875)	7/8/2003 9:38:50 AM
From: TobagoJack	Respond to of 74559

Taiwan removes cap on foreign stock ownership biz.scmp.com Tuesday, July 8, 2003 BLOOMBERG in Taipei Taiwan President Chen Shui-bian said foreign investors will be allowed to invest as much as they want in the island's stocks, scrapping a rule that limited individual funds to US$3 billion of shares. Mr Chen may be trying to stir up a stock rally ahead of the presidential election in March next year and may be aiming to strengthen the island's position against China, which is opening its yuan-denominated market to foreign funds for the first time this month. Taiwan's benchmark Weighted Index rose to a one-year high yesterday, its first day of trading after the island was declared free of Sars by the World Health Organisation. "President Chen understands that a bullish stock market is good for investors' pockets," said Phil Chen, a fund manager at Grand Cathay Securities Investment Trust. "A deeper pocket will boost consumer spending and the economy, which will help Chen in his re-election bid." Overseas institutions had a combined US$47.7 billion invested in Taiwan shares as of June 20, the Securities and Futures Commission said. Foreign funds account for about 10 per cent of Taiwan's market capitalisation. There are no figures available to show if any of the funds were pressed up against the limit. "We already have a lot of stocks in Taiwan," said Samir Arora, a fund manager at Alliance Capital Management in Singapore, without giving a figure. "We won't add more." Some fund managers said they hoped the scrapping of the cap may signal that the cumbersome approval process foreign investors must navigate to gain permission to invest in Taiwan will also be scrapped. "It does raise the question as to whether this is a prelude to lifting other restrictions on foreigners," said Ayaz Ebrahim, chief investment officer for equities at HSBC Asset Management in Hong Kong. "If you didn't have all these restrictions, I suspect there would be more money invested." The shares of Taiwan Semiconductor Manufacturing, Grand Commercial Bank and Via Technologies, the three stocks most popular with foreign funds last week, rose yesterday. Taiwan's NT$10.5 trillion (HK$2.37 trillion) equities market is two-fifths the size of China's market. The Chinese government yesterday approved Goldman Sachs as the fifth foreign investor qualified to buy yuan-denominated Class A shares on the Shanghai and Shenzhen exchanges. UBS, Nomura Securities, Morgan Stanley and Citigroup were previously approved. Funds seeking to invest in China must apply for status as qualified foreign institutional investors, or QFII, the same title used by Taiwan for its overseas investment programme. Taiwan's weighted index gained nearly a fifth this year, making it the world's 28th best performer among major indices. By comparison, Shanghai's A-share index rose 10.5 per cent. "Foreign investors were the major supporter of Taiwan stocks when concerns of the Iraq war and Sars scared local investors into dumping shares earlier this year," said Jerry Chen, research head at First Global Investment Trust in Taipei. "They are the winners." The Taiwan dollar last week posted its biggest weekly gain since November 8 on foreigners buying currency for share purchases, Bank of America said. "Investors won't buy more stocks in Taiwan simply because they are allowed to do so," said Martin Lau, a fund manager at First State Investments HK. "They will buy the Taiwan market because they are betting Taiwan is on track for a recovery."