WRAP: Taiwan Markets Get Boost From QFII Easing Plan
Taiwan's main bourse surged to its highest level in nearly a year Monday after the government announced an easing of restrictions on foreign investment in the local market.
Expectations of an increased flow of foreign cash into Taiwanese shares also helped support the local currency Monday, although the U.S. dollar ended stronger against the New Taiwan dollar after large-scale intervention by Taiwan's central bank.
Early Monday, Taiwan President Chen Shui-bian said the government would scrap a US$3 billion ceiling on securities investments by qualified foreign institutional investors. It will also eliminate a rule that requires foreign investors to remit funds approved for investment within two years of receiving that approval, he said.
After local markets closed for the day, an official at Taiwan's Securities and Futures Commission told Dow Jones Newswires the entire 12-year-old QFII system would be scrapped by the end of the year - well before previous hints of a demise in 2005 - with the initial regulatory easing taking place almost immediately.
Market participants hailed the plan, saying it will in the longer term not only entice more foreign funds into the stock market, but should also enhance the stability of a market that has been dominated by shortsighted retail investors.
"It is absolutely positive. We are more than happy to see this happen," said Kevin Pi , senior vice president at KGI Securities' QFII department in Taipei.
Taiwan's bourse rose 3.3% Monday to close at 5322.26, its highest level in 51 weeks.
The New Taiwan dollar ended at NT$34.405 against the U.S. dollar Monday, weaker than Friday's NT$34.390, but that was because the central bank bought a large amount of U.S. dollars in the last 15 minutes of trade - accounting for 39% of the whopping US$1.07 billion daily turnover - to bring the local dollar off highs around NT$34.330, dealers said. Total daily volume in the past few weeks has averaged below US$500 million.
Lou Tien-wei, director of the Securities and Futures Commission's QFII department, told Dow Jones the loosening in some of the regulations, such as the two-year deadline on remittances, will happen "within days."
He added: "Further work will be done and the QFII system will become history by the end of the 2003."
All related government agencies - including the central bank - are in consensus on this issue, Lou said.
Taiwan first began allowing foreign institutional investors - banks, insurers and fund management firms - into the local securities market under the QFII system in 1991.
The framework allowed the government to open up Taiwan's markets to foreign investment but still closely monitor and control the flow of foreign funds and their effect on the local currency.
Foreign investors still account for less than 20% of daily turnover.
Foreign flows related to the local stock market have regularly buffeted the New Taiwan dollar, which the island's central bank likes to keep steady to help protect Taiwanese exporters, the key drivers of the island's economy.
But foreign investors found the restrictions onerous and analysts said the QFII system has been a hindrance to Taiwan's presence in widely tracked international stock indexes.
As a result of the QFII system, Morgan Stanley Capital International assigns Taiwan's stock market a limited investment factor of 0.55, thus reducing the market's relative weight in MSCI's indexes.
A lower weighting means that fund managers who benchmark their performance based on MSCI indexes will tend to invest less money in Taiwan.
LIF, which ranges from zero to one, gauges a market's openness or a stock's availability to foreign investors. A higher LIF means foreign investors can more easily invest in the market or an individual stock.
All Taiwanese stocks in the MSCI indices have LIF, while in many other countries only some individual counters have been tagged with an LIF, according to MSCI officials.
Capped by the 0.55 LIF, Taiwan's weighting in MSCI's World Emerging Markets Free Index now stands at 12.8%, according to Sandy Lee, a senior analyst at Nomura International in Hong Kong.
The weighting, Lee reckoned, could rise to 20%-21% after Taiwan gets rid of the QFII system altogether.
But analysts say that even with the scrapping of the QFII system, Taiwan's central bank will still be able to retain its control over the local currency.
The Central Bank of China remains armed with the world's third-largest foreign exchange reserves, totaling US$176.69 billion at the end of June, to nudge the local unit where it likes.
The New Taiwan dollar is typically allowed to follow market forces, but the central bank intervenes in the market from time to time to ensure "dynamic stability."
台湾为外资松绑
台湾总统陈水扁周一在电视讲话中称，台湾近期内将全面大幅放宽外国专业投资机构(QFII)投资台湾证券市场的相关限制。
台湾证券暨期货管理委员会(Securities and Futures Commission，简称SFC或台湾证期会)发表声明表示，此举旨在促进台湾证券市场的发展，加快市场国际化的进程并吸引更多海外投资者。
台湾证期会负责国际化事务的Lou Tien-wei对道琼斯通讯社(Dow Jones Newswires)表示，放宽措施将于近日生效，而且历时12年之久的QFII机制也将在今年年底前被彻底废除。这一说法较政府先前的暗示大大提前。政府先前暗示，将于2005年废除QFII机制。
即将放开的措施包括以下内容。第一，取消最高投资额度30亿美元的规定。第二，取消投资核准后要在两年内汇入资金的限制。这样，投资者无需在两年后再次申请投资额度，从而降低了投资成本。第三，取消资格申请条件中对资产规模的限制。目前，外资券商资本额至少要达到5,000万美元才能被台湾认可为外国专业投资机构，而其他类型公司获得这一资格的最低资本额必须达到至少1亿美元。
除此之外，外资还将被进一步划分为个人和机构两类；外资投资台湾证券市场的申请程序也会更加简化。这两项放宽措施预计会在今年年底前正式实行。
市场人士对这些放松管制的措施表示欢迎，他们认为从长期看，这样做不仅可以吸引更多的海外资金流入台湾股市，而且有助于目前由散户投资者占主导地位的台湾股市增强稳定性。
KGI中信证券(KGI Securities)驻台湾的QFII部门的副总裁Kevin Pi表示，对股市而言，这绝对是条利好消息。
QFII机制已经成为台湾股市发展的阻力
台湾的QFII机制于1991年开始施行，允许包括银行、保险商和基金公司等在内的境外机构投资者投资台湾证券市场。它便于政府管理和监控台湾资本市场资金的进出，尤其是密切关注能够冲击新台币地位的资金流向。
而如今，QFII机制已经成为一种阻力，导致台湾市场无法进入那些追踪范围广泛的国际股市指数。
由于这种机制的存在，摩根士丹利资本国际公司(Morgan Stanley Capital International Inc., 简称MSCI)给台湾股市分配的投资限制级别(LIF)为0.55，从而降低了台湾市场在MSCI指数中的相对权重。
据野村国际(香港)有限公司(Nomura International (Hong Kong) Limited)资深分析师Sandy Lee称，台湾在MSCI的全球新兴市场外资自由投资指数(World Emerging Markets Free Index)中的权重目前为12.8%。
较低的权重意味著那些以MSCI指数为基准来衡量自己投资组合表现的基金经理们会降低对台湾市场的投资比例。 LIF最低为零，最高到1，用于衡量市场开放程度或境外投资者入市投资的难易程度。LIF越高，则意味著境外投资者越容易进入该市场。
Lee估计，在台湾彻底废除QFII机制后，该权重可能会升至20%-21%。
台湾央行仍有能力控制新台币汇率
政府要放松外资投资限制的消息宣布后，对海外增量资金将流入台湾股市的预期促使新台币上扬。但由于台湾央行(Central Bank of China)对外汇市场进行大规模干预，美元兑新台币汇率周一才能收高。
台湾央行的外汇储备额仍居世界第三，截至6月底的外汇储备额高达1,766.9亿美元，足以使其随心所欲地控制新台币汇率。 新台币汇率通常是随市场变动，但央行时常进行的入市干预保证了新台币汇率能够维持动态稳定。
