Taiwan has ‘lots to do’ for FTSE

“I would hope that by September the regulatory changes necessary would be in place,” FTSE Chief Executive Officer Mark Makepeace said in an interview yesterday in Taipei. He declined to say if Taiwan’s rating would be raised in FTSE’s next assessment of market status, to be announced in September. The London-based index compiler currently ranks Taiwan as an “advanced emerging” market. Raising a country’s ranking can help attract more of the US$3.5 trillion in funds from investors who benchmark their holdings against FTSE’s indexes.

FTSE is looking for regulatory improvement such as allowing free availability of the local currency, and changes to rules on stock borrowing and lending, Makepeace said. The index compiler is working with exchange officials and gathering opinions from investors as it assesses Taiwan’s standing, he said.

“You’ll see the market volume heading up as we begin to see an end date,” he said. An upgrade in status could boost trading volume by 5 percent to 10 percent, Makepeace said yesterday.

Taiwan Stock Exchange Corp. Chairman Wu Rong-i said the increase would be even larger than Makepeace’s estimate while declining to provide a figure.

Foreign trading in Taiwan will expand to between 25 percent and 30 percent of overall volume this year, from 20 percent last year, Wu said in a separate interview yesterday. Taiwan’s TAIEX index has risen 11 percent in dollar terms this year, making it the best-performing Asian stock benchmark tracked by Bloomberg. The MSCI Asia Pacific Index has slumped 9.2 percent in 2008 on concern the U.S. economy will fall into recession amid mounting losses tied to mortgage investments.

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