Taiwan insurance firms in for boost
By Winny Wang |
August 6, 2010, Friday
|
Print Edition
Print Edition
IN a bid to seek higher investment returns, Taiwan's financial supervisor plans to allow Taiwan insurance companies to invest up to 10 percent of their overseas allocation quota in the equity market on the Chinese mainland by the end of this month.
The move is expected to channel more than NT$300 billion (US$9.44 billion) into stocks, corporate bonds, government debt, initial public offerings, exchange-traded funds and yuan deposits on the mainland.
The island's insurers will be permitted to invest up to 10 percent of their overseas allocation quota in stocks on the mainland, 5 percent of the quota in government and treasury bills, while their investment in shares or bonds of a single company will be limited to below 1 percent of the quota, the supervisory body said in a proposal on its website.
The total investments on the mainland can't exceed 10 percent of the insurers' overseas investment quota, the proposal said.
Taiwanese insurers, which can invest as much as 45 percent of their total assets in overseas markets, had assets of NT$11.4 trillion by the end of March, of which NT$3.1 trillion had been invested overseas.
"The policy will enable Taiwanese investors to benefit from the mainland's growing economy, as well as channel more funds into the mainland's equity market. But the initial investment won't be so hefty as to rock the A-share market," said Li Daxiao, an analyst with Yingda Securities Co.
Qualified insurers must have a risk-based capital ratio of at least 250 percent and should not have broken the island's rules on overseas investments in the 12 months prior to their application, the proposal said.
Besides, the insurers need to get approval for the mainland's Qualified Foreign Institutional Investor program, which grants overseas investors a quota to invest in stocks, bonds and funds on the mainland.
The mainland and Taiwan on June 29 signed the long-awaited Economic Cooperation Framework Agreement, a move widely hailed as a milestone in cross-strait relations.
The pact will end tariffs on hundreds of products traded across the Strait and allow Taiwanese firms access to 11 mainland service sectors, including banking and insurance.
The move is expected to channel more than NT$300 billion (US$9.44 billion) into stocks, corporate bonds, government debt, initial public offerings, exchange-traded funds and yuan deposits on the mainland.
The island's insurers will be permitted to invest up to 10 percent of their overseas allocation quota in stocks on the mainland, 5 percent of the quota in government and treasury bills, while their investment in shares or bonds of a single company will be limited to below 1 percent of the quota, the supervisory body said in a proposal on its website.
The total investments on the mainland can't exceed 10 percent of the insurers' overseas investment quota, the proposal said.
Taiwanese insurers, which can invest as much as 45 percent of their total assets in overseas markets, had assets of NT$11.4 trillion by the end of March, of which NT$3.1 trillion had been invested overseas.
"The policy will enable Taiwanese investors to benefit from the mainland's growing economy, as well as channel more funds into the mainland's equity market. But the initial investment won't be so hefty as to rock the A-share market," said Li Daxiao, an analyst with Yingda Securities Co.
Qualified insurers must have a risk-based capital ratio of at least 250 percent and should not have broken the island's rules on overseas investments in the 12 months prior to their application, the proposal said.
Besides, the insurers need to get approval for the mainland's Qualified Foreign Institutional Investor program, which grants overseas investors a quota to invest in stocks, bonds and funds on the mainland.
The mainland and Taiwan on June 29 signed the long-awaited Economic Cooperation Framework Agreement, a move widely hailed as a milestone in cross-strait relations.
The pact will end tariffs on hundreds of products traded across the Strait and allow Taiwanese firms access to 11 mainland service sectors, including banking and insurance.
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