The Shanghai-Hong Kong Stock Connect is set to go into effect on Monday. That’s had a dampening effect on trading in Taiwan, since the new program was announced last week.
But financial authorities in Taiwan say that efforts are being made to link up with equity markets in Singapore, Japan, and London, and that in the long run, the link between Shanghai and Hong Kong will have a positive effect on markets on the two sides of the Taiwan Strait.
As of this coming Monday, the Shanghai-Hong Kong Stock Connect will enable foreign investors to trade Chinese A-shares in Hong Kong, and investors in Shanghai will be able to trade Hong Kong shares in China.
That has prompted concern in Taiwan that the new link would tempt local investors to move funds to Hong Kong in order to buy stocks listed in Shanghai. Turnover on the Taiwan Stock Exchange on Nov. 14 was an anemic NT$73.6 billion (US$2.4 billion).
But Taiwan’s top financial regulator, the Financial Supervisory Commission (FSC) believes that investors will continue to pick up local shares. That’s because companies listed in Taipei are transparent when it comes to their finances and the local market has a relatively high turnover ratio.
FSC Chairman Tseng Ming-chung told the legislature’s finance committee on Thursday that a stock link between Taiwan and Singapore is likely to be launched in the first half of next year. He said that would be followed by a similar mechanism between Taiwan and Japan.
Tseng said that negotiations on a stock market link between Taiwan and London are also under way to help Taiwan deal with the impact of the link between the Shanghai and Hong Kong markets.