GAFM Expert Opinion

Taiwan Aims to Sell Depositary Receipts in China

By Michael Preiss

Wednesday, August 5, 2009 19:39:58 PM

[b]For information only:[/b]
 
·         Taiwan, year-to-date +47.2%  trading at an estimated forward P/E of  16
·         The Taiwan Stock Exchange will seek to list some of the island’s traded companies in Shanghai to attract more investors as ties with mainland China increase
·         Taiwanese and Chinese investors currently are restricted from buying each others’ equities directly
·         Taiwan and China are poised to sign accords allowing more investments in each other’s banking, insurance and securities industries, after agreeing on a framework for cooperation on April 26 in the third round of cross-strait talk

[b]Taiwan Aims to Sell Depositary Receipts in China as Ties Warm
2009-08-05 19:32:26.678 GMT
 [/b]
 
[b]By Weiyi Lim[/b]

Aug. 6 (Bloomberg) -- The Taiwan Stock Exchange will seek to list some of the island’s traded companies in Shanghai to attract more investors as ties with mainland China increase, the bourse’s Chairman Schive Chi said.
“We can foresee the steps we are going to take and will take them one by one,” Schive said in an interview in Taipei. “One of the steps is listing China depositary receipts. Let’s tentatively target five to 10 shares to be mutually listed.” Taiwan’s Taiex index has risen 49 percent since Dec. 31 and the island’s stocks may extend gains in the next three to six months as relations with China improve, UBS AG said in a report July 31. The measure surged 6.7 percent on April 30, the day Hong Kong-based China Mobile Ltd., the world’s biggest phone company, said it would buy 12 percent of Taipei-based Far EasTone Telecommunications Co. as China ended a ban on investments in the island. All 692 stocks in the gauge climbed.

Taiwanese and Chinese investors currently are restricted from buying each others’ equities directly. Schive said in May a trading platform eventually may list as many as 30 stocks from each market. Chen Ji, a press official at the Shanghai Stock Exchange, declined to comment on whether it will allow Taiwan companies to sell depositary receipts on the city’s bourse.

[b]‘Good News’[/b]
 
“This is definitely good news,” said Kevin Lin, assistant vice president at Taishin Investment Trust Co. in Taipei, whose firm oversees $800 million of assets. “When our shares are exposed to a bigger market, it makes the shares more valuable. This will also lead to more inflow of capital.”

Relations between the countries, broken since the Communist Party rose to power in 1949, warmed after Taiwan President Ma Ying-jeou took office in May 2008 and abandoned his predecessor’s pro-independence stance. Taiwan and China resumed direct flights, shipping and postal services across the Taiwan Strait on Dec. 15, ending a six-decade ban.

Taiwan and China are poised to sign accords allowing more investments in each other’s banking, insurance and securities industries, after agreeing on a framework for cooperation on April 26 in the third round of cross-strait talks. Taiwan aims to start formal talks by October on a trade accord with China to boost jobs and gross domestic product, Yiin Chii-Ming, the island’s economic affairs minister, said July 29.

Any plan to list securities on the mainland must wait until authorities on both sides have signed a financial memorandum of understanding, Schive said. The exchange, based in Taipei, will only begin the plan to list depositary receipts in China once it has signed its own agreement with the Shanghai bourse, started compiling an index of exchange-traded funds and enabled the direct listing of ETFs in China, he said.

China’s shares are valued at $3.5 trillion, the world’s third-largest stock market, according to data compiled by Bloomberg. Taiwan’s market is worth $589 billion, the data show.
 

Vietnam: Breaking out on the charts

By Michael Preiss

Monday, July 27, 2009 23:17:46 PM

[b]The Trend is your friend again in Vietnam ? [/b]   Vietnam last week, best performing global equity market
 
London listed:  VOF  Vietnam Opportunity Fund
 
Hong Kong listed:  3087  FTSE Vietnam Tracker
 
Dear all,
 
Vietnam was last year’s worst performing Asian market and the 1st emerging market that started to roll over when sub-prime led to global sell off in asset markets. Now Vietnam seems like breaking out on the charts with heavy volume.
 
Last week Vietnam was the best performing global equity market in the period of July 21 to July 27th.
 
Please see chart below.  The VOF (Vietnam Opportunity Fund) is now back above the 200 day purple yearly moving average line, implying that Vietnamese stocks are now again in an uptrend.  The VOF is still trading at a discount to NAV of  -32%. 




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