Taiwan starts drive to bring domestic company listings back from China

tauringhuang.

By Kathrin Hille in Taipei

Wednesday, August 27, 2008
  

The Taiwan Stock Exchange has embarked on a big drive to lure Taiwanese-owned companies in China back home to list, according to the bourse's new head.

Schive Chi, who became chairman this month, told the FT in his first interview yesterday that TWSE's own planned initial public offering would take a back seat to this campaign.

He said: “Linking up across the Strait is so much more important than the IPO and preparations for it, because the former will bring practical benefits”.

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The remarks suggest that the exchange's IPO as well as plans for a potential link with other exchanges and foreign investors are likely to be delayed until 2009.

Taiwan's former government, which was replaced in May, had hoped to see the IPO before the end of this year.

Mr Schive's predecessor had indicated that the TWSE was in talks with foreign investors interested in taking a stake of more than 20 per cent.

But Mr Schive said absolute priority was now been given to encouraging the return of Taiwanese companies that had been driven away by the former government's restrictive cross-Strait policies.

With cumulative investment in China estimated at more than $150bn, Taiwan is one of the largest sources of foreign direct investment in China.

But until last month, Taipei capped the amount that domestic companies could invest in China at 40 per cent of their net worth.

It also restricted companies to spending funds raised in domestic listings on investments in China, barred overseas companies with Chinese capital from listing in Taiwan and kept a ban on Chinese investment in the Taiwanese market.

As a result, close to 60 Taiwanese-owned companies have listed in Hong Kong over the past six years.

In July, the new government moved to abolish some of these restrictions and relax others, hoping to persuade up to 200 Taiwanese-owned businesses to list back home within four years.