In­vestors vi­tal for cap­i­tal mar­ket: FSC

The China Post - - LOCAL - BY JOHN LIU

Once big in­vestors move their money from Tai­wan and be­come familiar with cap­i­tal mar­kets over­seas, they are less likely to re­mit money back again, said the Fi­nan­cial Su­per­vi­sory Com­mis­sion (FSC) chair­man yes­ter­day.

Chair­man Tseng Ming-chung ( ) said it takes much time and ef­fort to re­mit money abroad, and big in­vestors pre­fer not to avoid the has­sle of mak­ing the ar­range­ments nec­es­sary to trans­fer the money back home.

They con­sider re­turn­ing only when Tai­wan stock prices drop lower in com­par­i­son with other mar­kets, he said. Tseng made the com­ments while mak­ing an ap­pear­ance at the 2015 Golden Ser­vice Awards cer­e­mony held by Com­mon­Wealth Mag­a­zine ( ).

Tseng used data from the FSC to come to his con­clu­sion. Trade vol­ume of nat­u­ral per­sons used to av­er­age NT$33 tril­lion, but the amount dropped to NT$25 tril­lion in 2012 af­ter the in­tro­duc­tion of the cap­i­tal gains tax, be­fore plung­ing fur­ther to NT$23 tril­lion in 2013.

The launch of stock day trad­ing in 2014 helped boost turnover to NT$27 tril­lion, but it was still sub­stan­tially lower than the peak vol­ume of NT$44 tril­lion.

Nat­u­ral per­sons’ share of trade fell from 80 to 59 per­cent, Tseng pointed out.

For­eign in­sti­tu­tional in­vestors’ turnover, on the other hand, has stayed be­tween NT$9.9 and NT$10 tril­lion, while in­vest­ment trusts’ trade has been main­tained be­tween NT$700 bil­lion and NT$800 bil­lion

Tai­wan’s stock mar­ket re­quires the pres­ence of large and medium in­vestors, and what the FSC can do to help re­al­ize this is connect lo­cal stocks with the world and make the trad­ing mech­a­nism more trans­par­ent, Tseng said.

That is why the FSC launched the “as­cen­sion plan” ( ) on Feb. 3, which is a pack­age of stock mar­ket stim­u­lus mea­sures.

FSC Pro­poses Cut to Fu­tures Trans­ac­tion Tax

In an at­tempt to fur­ther jump-start the cap­i­tal mar­ket, the FSC pro­posed re­duc­ing the fu­tures trans­ac­tions tax yes­ter­day.

In fact, the tax rate has been cut four times since the pas­sage of the Fu­tures Trans­ac­tion Tax Act 1998. It was last re­duced to 0.002 per­cent in April 2013.

The FSC claimed the ad­just­ment had a pos­i­tive im­pact, as the amount of trade grew from 153 mil­lion lots in 2013 to 202 mil­lion lots in 2014, rep­re­sent­ing a 32-per­cent growth.

How­ever, the fu­tures trans­ac­tion tax has not been im­ple­mented in the U.S., Ja­pan, Sin­ga­pore, and Hong Kong’s fu­tures mar­kets, the FSC said, adding that ma­jor mar­kets have teamed up for joint mar­ket­ing ef­forts.

Tai­wan lost com­pet­i­tive­ness by levy­ing the trans­ac­tion tax, which also make it more dif­fi­cult for Tai­wan to form al­liances with other mar­kets, the FSC said.

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