Taiwan will let China's qualified domestic institutional investors (QDII) buy local stocks worth up to $500 million, the Financial Supervisory Commission said on Friday, falling short of market expectations. The decision was "obviously one of the main reasons Taiwan stocks fell today," said Ernest Chiang, fund manager with IBT Asset Management.
"However, Taiwan stocks are abnormally strong today despite the factor, indicating that investors are still optimistic restrictions on Chinese investment will loosen up as the Taiwan-China relationship warms up." Qualified Chinese investors who apply to invest in Taiwanese stocks will be given a month to submit their funds, failing which they will be barred from applying again in the next six months, the Commercial Times reported on Monday.
Hon Hai Precision Industry, the island's largest electronics parts maker and a big investor in China, was down 0.98 percent, with the electronics sub-index 0.20 percent lower. Fubon Financial, parent of Taiwan's No 2 life insurer, fell 0.26 percent and smaller rival Shin Kong Financial, dropped 1.85 percent, dragging the financial sub-index down 0.57 percent.
"Though the memorandum of understanding (MOU) between Taiwan and China took effect on Saturday, many detailed regulations have yet to be made," said Bevan Yeh, senior fund manager with Prudential Financial Securities Investment Trust. Taiwan has signed a financial service pact with China, allowing its banks to tap China's massive market and paving the way for banks on both sides to invest in each other.
The TAIEX will hover around 8,200 to 8,400 points this week, said Tom Tang, vice-president with Masterlink Investment Advisory. Quanta, the world's largest contract laptop PC maker, bucked the trend by advancing 0.56 percent, following a newspaper report that the company has been awarded the contract to make Apple Inc's new 22-inch all-in-one PCs.
Mediatek Inc, the world's No 2 cell phone chip supplier, climbed 0.34 percent after the company signed a co-operation agreement with China's AST Wireless to help it gain a bigger share of China's 3G mobile market on Friday. Chi Mei Optoelectronics, Taiwan's No 2 LCD maker, gained 0.74 percent on another newspaper report that the firm had won an order from Sony to produce some 5 million LCD panels, or one-sixth of its total output capability.