Taiwan Stock Exchange Corporation (TWSE) and Japan Exchange Group Inc. (JPX) are set to expand their international links with the listing of the first leveraged and inverse ETFs tracking the benchmark TOPIX index on TWSE in the near future.
“We hope that the launch of these ETFs will prelude the introduction of more products and initiatives that make it easier for investors in Taiwan and Japan to trade each market,” said Mr. Chao-zon Yang, Senior Executive Vice President of TWSE. “Japanese investment in the Taiwan market has been growing steadily over the past few years and we are committed to introducing new investment channels between both markets.”
Mr. Yang was among senior financial leaders attending the closed-door ‘Forum for Capital Cooperation between Taiwan and Japan’ that recently concluded in Taipei. Other attendants included Ms. Rosemary Wang, deputy director-general at the Securities and Futures Bureau of Taiwan’s Financial Supervisory Commission (FSC); Mr. Yasuyuki Konuma, Executive Officer of New Listings and Market Business Development at JPX; Mr. Shin-chung Chen, Senior Vice President of the Corporate Planning & Strategy Department at TWSE; as well as scholars and industry experts from the Taiwan Institute of Economic Research; Interchange Association, Japan; Nomura Research Institute, Taiwan; and Fubon Asset Management.
During her speech, Ms. Wang illustrated the advantages of investing in the Taiwan market, particularly its famous high-tech industry, as well as the reasonable P/E ratios, high liquidity and attractive dividend yields available to investors. She pointed out that average dividend yields for Taiwan-listed companies reached 3.8% in 2015.
Mr. Konuma outlined the positive views held by Japanese investors, particularly retail investors, towards the Taiwan capital market given Taiwan’s close geographic proximity to Japan and its status as a popular tourism destination. With 60% of assets of ETFs that track foreign equity in Japan being held by retail investors, there will be demand for Taiwan-tracking ETFs that list in Japan in the future.
Since the listing of the Taiwan Top 50 Tracker in 2003, the Taiwan ETF market has steadily matured. As of July 2015, the AUM of the 30 ETFs listed on TWSE reached NT$234.7 billion. The combined turnover of ETFs traded on TWSE between January and July 2015 reached NT$875.5 billion, eclipsing total turnover of NT$432.2 billion for the whole of 2014.