January 23, 2013 / 7:56 AM / 5 years ago

Taiwan to ask China for more investment quotas

TAIPEI (Reuters) - Taiwan will ask for additional quotas to invest in China when the Chinese securities regulator visits here next month for the first time, Taiwan’s financial regulator said on Wednesday, as cross-strait banking ties pick up pace.

The establishment of a clearing system for Chinese yuan transactions in Taiwan has raised hopes that Taiwan will play a key role in the internationalization of the yuan, boding well for higher quotas as well as for Taiwan to join Hong Kong in becoming an off-shore yuan center.

The Chinese quotas for Renminbi Qualified Foreign Institutional Investment (RQFII) and QFII allow foreign investors to use offshore yuan to buy mainland securities.

Chairman Guo Shuqing of the China Securities Regulatory Commission is set to visit around February, with the higher quotas on the agenda for talks between the two sides, said Lee Jih-chu, vice chairwoman of Taiwan’s Financial Supervisory Commission.

“We’re making an all-out effort to get as much QFII and RQFII quotas as possible. After all, it’s very difficult to apply, as so many foreign investors are already waiting in line,” Lee told Reuters in an interview on Wednesday.

“A global financial group has been awarded a QFII quota of only US$1 billion,” she said, without elaborating further.

    Fubon Financial (2881.TW), among the island’s top five financial holding firms, is among a few Taiwanese companies that have been granted a QFII quota, of $400 million.

    Taiwan, whose banking sector has generated lower returns on equity than most Asian peers, is hoping to take advantage as China plans to make the yuan basically convertible as early as 2015.

    Earlier this month, Guo said in Hong Kong that China could increase by 10 times the current level of investment quotas for RQFII and QFII.

    China introduced the RQFII scheme at the end of 2011 with an initial quota of 20 billion yuan ($3.2 billion) and raised that to 70 billion yuan last year. ($1 = 6.2198 Chinese yuan)

    Reporting by Faith Hung and Emily Chan; Editing by Chris Gallagher

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