萬國法律事務所

Increasing the permitted investment amount of Qualified Domestic Institutional Investors (QDII) in the Taiwan stock market will hopefully be a bargaining chip in the second round of Economic Cooperation Framework Agreement (ECFA) negotiations regarding the relaxation of restrictions on securities firms with capital from Taiwan who wish to invest/operate in China.

According to an official at Taiwan’s Financial Supervisory Commission, due to China’s protection strategy, Chinese securities firms can profit substantially in its own domestic market. Therefore, Chinese securities firms have no motive to establish any office or subsidiary in Taiwan. However, China’s securities firms are interested in making investment in the Taiwan stock market through QDIIs. In view of the above, the Taiwan Government hopes that increasing the amount that QDII’s may invest in Taiwan will be a bargaining chip for Taiwan in the second round negotiations for ECFA.

Under current regulations, the total amount permitted for QDII’s investment in the Taiwan stock market is US$ 500 million (approximately NT$ 14,600 million), and the amount that individual QDIIs can invest is restricted to US$ 100 million (approximately NT$ 29,200 million). If the QDII investment amount in the Taiwan stock market is increased, it should help to increase the flow of capital into the Taiwan stock market.