First leveraged ETF to list in Taiwan in second half

12 May 2014   Category: News, Asia, Global, Taiwan   By Hui Ching-hoo

A number of innovative ETF products including leveraged, gold, and energy futures funds are expected to come online in Taiwan as early as the second half of this year, according to a report from United Daily News.

Sush-Der Lee, chairman of the Taiwan Stock Exchange (TWSE), told local media that the emergence of these products would significantly boost local ETF market liquidity.

Mr. Lee added that the bourse would push ahead with further innovations including the launch of cross-border ETFs and foreign currency denominated ETFs over the long-term.

As of the end of April, there were 21 ETFs listed on the TWSE, accounting for around 1% of total market turnover. The majority of the ETFs are designed to track Taiwanese equities and China A-share stock indices.

With these new products coming online, Mr. Lee forecast an increase in the ratio of ETF transactions to 5% within the next three years.    

Mr. Lee compared Taiwan’s nascent ETF market to that of South Korea’s, where such products comprise around 20% of all transactions. Korea currently has more than 100 ETFs listed on its stock exchange, with a wide array of underlying indices, such as bonds and commodities, as well as leveraged ETFs.   

The TWSE currently has 46 indices, although it is looking to increase this number.  In April this year, it signed a memorandum of understanding with the Shanghai Stock Exchange that will pave the way for the launch of a Greater China Index, which will track stocks listed in Taiwan, Shanghai, and Hong Kong.