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TAIPEI - TAIWAN on Thursday announced that it will relax restrictions on financial investments in China and Hong Kong by local firms amid improving ties between the rivals.
The government will scrap a rule that requires local brokerages to own at least a 25 per cent stake in the mainland companies they invest in, said Susan Chang, deputy chairwoman at the Financial Supervisory Commission, the island's top financial regulator.
In addition, securities firms will be allowed to invest an equivalent of up to 20 per cent of their net worth in China, doubling the current ceiling of 10 per cent, Mr Chang told reporters after a weekly cabinet meeting.
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Hong Kong-listed companies, except those that are at least 20 per cent-owned by Chinese investors or based in China, would be able to list shares in Taiwan.
The cabinet will also remove a regulation that requires foreign mutual funds investing in Taiwan to prove that they are not funded by Chinese investors.
'The relaxation (of the rules) will be conducive to rejuvenating Taiwan's capital market and will make it more international,' Mr Chang said.
'The opening will also allow Chinese investors to invest in our stocks, indirectly.'
The new rules, which will take effect within a week, come amid thawing tensions across the strait following the presidential victory of Ma Ying-jeou of the China-friendly Kuomintang earlier this year.
The commission gave the go-ahead in April for Fubon Financial Holding to acquire a 20 per cent stake in Xiamen City Commercial Bank for 34 million US dollars (S$46.4 million) through its Hong Kong subsidiary - the first time a local bank has been allowed to invest in the mainland.
The investment proposal is under review by Chinese financial authorities.
Taiwan's economic ministry is also reportedly mulling raising the cap on local corporate investment in China to 50 per cent of a company's net worth from the current 40 per cent starting in August. -- AFP
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