Taiwan’s TWSE mulls introducing gold, RMB ETFs
08 November 2012
News, Asia, China, Hong Kong, Taiwan
By Hui Ching-hoo
Taiwan Stock Exchange (TWSE) is considering widening the diversity of its index products by introducing gold ETFs and RMB-denominated ETF products.
Speaking at a Citi ETF conference in Hong Kong on Tuesday (November 7), Pony Huang, vice president of the corporate planning and strategy department at TWSE, stated that the signing of the MOU on Cross-strait currency settlement between China and Taiwan on August 31 has given Taiwan’s financial authority space to launch RMB-denominated products. “We’re studying the feasibility of launching RMB denominated ETFs,” she said.
Ms. Huang noted that Taiwanese ETF investors have significant exposure to US ETFs. As such, the authority is working to diversify the local ETF product base to attract investors back to the domestic ETF market. She revealed that commodity ETFs, such as gold ETFs, are under consideration.
The authority is also mulling the launch of RQFII ETFs, in view of Taiwan’s rising RMB deposits. Ms. Huang noted that Taiwan’s central bank is in talks with its Mainland counterpart over the issue.
Separately, David Quah, assistant vice president of the cash market trading division of Hong Kong Exchanges and Clearing (HKEx), said that Hong Kong’s ETF market has been successful in terms of attracting local and international investors to access the China market. The second phase of market development is to attract Mainland capital to invest in Hong Kong.
Mr. Quah noted that differentiation among indexes will give Mainland investors a variety of niches to invest in. To diversify index bases, HKEx has teamed up with bourses across the Brazil, Russia, India, China, South Africa (BRICS) countries to set up the BRICS Exchanges Alliance. The alliance allows local ETF managers to launch index products tracking the BRICS indexes. Investors can also carry out arbitrage trades and hedging with the index futures.
HKEx is also evaluating the possibility of launching an index to gauge A-share and H-share performance through China Exchanges Services Company (CESC), a joint venture between the Hong Kong, Shanghai and Shenzhen stock exchanges.
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