A-share market opens to Taiwan investors

Mainland securities chief unveils proposal during landmark visit

The top securities regulator is ready to open the A-share market for Taiwan institutional investors holding offshore renminbi deposits, a senior official of the China Securities Regulatory Commission said on Tuesday.

The investment quota for renminbi qualified institutional investors, or RQFIIs, is likely to be 100 billion yuan ($16 billion), according to the commission.

Financial institutions from Taiwan will be able to hold as much as 51 percent, up from 49 percent, of the joint-venture brokerages' shares in Shanghai, Fujian and Shenzhen, said Tong Daochi, head of the international department of the commission, speaking in Taipei.

The commission is also considering allowing individual investors from the island to trade A shares on the Shanghai and Shenzhen stock exchanges.

The proposal was part of a policy package unveiled by commission Chairman Guo Shuqing during his first official visit to Taiwan which started on Monday.

The Shanghai Composite Index climbed 12.47 or 0.53 percent to 2358.98 at Tuesday's close, the highest since June 1, on news of the proposal.

Securities companies saw the largest increase compared with other sectors. China Merchants Securities Co Ltd hit the 10 percent ceiling, for the second day, on Tuesday.

Analysts said the internationalization of China's currency needs more offshore markets for support.

So far, the RQFII program only operates in Hong Kong. By the end of December, 24 financial institutions under the program had been approved, with a 67 billion yuan investment quota, according to the State Administration of Foreign Exchange.

Individual investors in Taiwan can directly invest in the mainland's dollar-denominated B-share market, and they can also buy yuan-denominated A shares through the qualified foreign institutional investor (QFII) program.

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