Taiwan set to dive into inflating offshore RMB pool

28 October 2013   Category: News, China, Taiwan   By Hui Ching-hoo

Taiwan’s financial regulator has been bolstering its infrastructure in response to the upward spiral in RMB deposits amid expectations that the offshore RMB pool will grow 13-fold to reach 1.3 trillion RMB (US$214 billion) by 2017.  
 
Cheng Cheng-Mount, president of the Taiwan Academy of Banking and Finance, said at Asia Asset Management’s recent Taiwan roundtable forum that the Taiwanese regulator has unveiled multiple RMB-related initiatives as part of its broader plan to revive its capital markets. 
 
Mr. Cheng noted that local asset management firms are ready to launch RQFII products – including RQFII funds and RQFII ETFs – in anticipation of the release of 100 billion RMB worth of RQFII quotas. 
 
In the equity market, he expects additional channels to become available, creating opportunities for companies to raise RMB in Taiwan and invest in China through RMB foreign direct investment (RFDI), by which point more RMB-denominated shares are expected to come on line. 
 
“The Taiwan Stock Exchange (TWSE) is in the process of building a trading platform for foreign currency-denominated products to attract more companies operating in China to list and establish TWSE as a fund centre for hi-tech and innovative firms,” he added. “The bourse will also introduce international investment vehicles to meet investor demand.” 
 
According to a recent survey by Standard Chartered Bank, Taiwan’s RMB deposits exceeded 100 billion RMB in October. The expansion of the RQFII scheme and the increasing usage of RMB by international investors is expected to lift the pool up to 1.3 trillion RMB in 2017, equivalent to about half of Taiwan’s GDP in 2012.