beyondbrics

Stock exchanges weren’t among the 700-odd items on the ‘early harvest list’ of sectors likely to benefit from the broad trade deal Taiwan recently signed with China, but that hasn’t stopped Taiwan’s bourse from believing it would be a major indirect beneficiary of closer and more open cross-Strait economic links.

Schive Chi, chairman of the Taiwan stock exchange, said Tuesday that a number of ‘red chips’ – Hong Kong-listed mainland Chinese companies that are not listed in China – have expressed interested in listing Taiwan Depository Receipts, and that the first application to do so could come as early as next month.Schive’s comments comes as Yangzijiang, a Singapore-listed, Chinese shipmaker last month became the first Chinese company to apply to list in Taiwan. Yangzijiang said in May that it hoped to raise US$100m from the listing.

Since beginning a drive to attract foreign listings nearly two years go, Schive has had success in luring overseas Taiwan companies back home to list, such as food producers Want Want and Tingyi, and electronics maker Ju Teng. The Taiwan stock exchange also managed its first foreign listing in May when Integrated Memory Logic, a US chip maker, raised $44m in its initial public offering.

Schive has long been eyeing Chinese opportunities, and should listing TDRs prove an attractive way to raise capital for Chinese companies as well, this would give Schive a third, and potentially much bigger, source of new cross-border listings. There were only a total of 10 TDR listings last year and 4 so far this year, but Schive said he is confident that the Taiwan stock exchange could reach its goal of 20 new TDR listings this year with the growing interest from ‘red chip’ companies.

Hong Kong, which this month saw the record $22bn listing of the Agricultural Bank of China, is not likely to miss a few small, secondary listings, but as regional competition between bourses continues to to intensify, Taiwan could well find a niche from which it could compare with the juggernauts of Hong Kong and Shanghai.