Three Taiwan pension funds to take over NT$44 billion state-owned equities
26 August 2013
By Asia Asset Management
Taiwan’s executive body, the Executive Yuan, is planning to sell NT$44.1 billion (US$1.47 billion) of state-owned equities to three pension funds, the Labor Pension Fund (LPF), the Labor Insurance Fund (LIF), and Chungwa Post Pension, in a bid to ease the government’s financial distresses, according to a report from Commercial Times.
The equities include the shares of Chungwa Telecom, Taiwan Corporative Holdings, Mega Holdings, Taiwan Fertilizer, TSMC, and China Steel.
The initiative will be submitted to the Legislative Yuan for approval by the end of August.
The directive comes as the Taiwanese government expects a decline of 0.7% in taxation in the current financial year, mainly due to reduced tax income from the Taiwan Stock Exchange and the Taiwan Futures Exchange.
A spokesperson from the Executive Yuan told local media that the pension funds will purchase the shares simultaneously at designated dates, noting the pension funds will hold the shares for long-term investment purposes – suggesting the purchase will not cause any significant share price movements.
The sales of the state-owned equities, combined with the NT$18 billion in revenue from share disposals by the National Development Fund, are expected to generate additional revenues of NT$62.1 billion for the Taiwanese government in the coming financial year.
The Taiwanese government has little room to address its financial discomfort through debt issuance as its debt ratio currently stands at 38.7% GDP, close to the stipulated limit of 40.6%.
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