Taiwan aims to surpass Russia in market cap

TWSE Chairman Schive Chi said that Taiwan hopes to lift market capitalization by persuading foreign companies to list on the local bourse.

He said Taiwan's stock market rankings have been falling over the past decade, while the rankings of emerging markets like Russia and China have been on the rise because of their fast economic development. Taiwan needs to catch up, Schive said.

He made the comments on the first trading day of Taiwan depository receipts (TDRs) for China's Yangzijiang Shipbuilding (Holdings) Ltd.

According to the World Federation of Exchange, the TWSE was the world's 21st largest stock market in terms of market capitalization in 2009, totaling US$655 billion and trailing the Moscow Interbank Currency Exchange (MICEX), which was at US$736 billion.

Schive pointed out that the TWSE was ranked the 15th largest stock market in terms of market capitalization in 2000.

In terms of the number of listed companies, the TWSE grabbed 20th place with 755 listed companies in 2009, compared with 16th place in 2000.

Schive said that as the MICEX is Taiwan's nearest rival in terms of market capitalization, the island has set a goal of leaping ahead of the Russian market by introducing more foreign companies.

Chinese entities account for 30 percent of the Singapore market's capitalization, and the ratio on the Hong Kong market even exceeds 65 percent, he said.

Schive said he hopes Yangzijiang's TDR listing encourages more Chinese entities to issue stocks in Taiwan.

He said the TWSE is planning to set up a special exchange platform exclusively for TDR trading, with different trading rules from the main board that could include differences in trading hours, the ceiling of fluctuations and currencies used in transactions.

The planned platform will enhance information transparency to ensure a fair market, he said.

Yangzijiang's TDRs closed up 6.91 percent at NT$20.10 on high hopes of closer business ties across the Taiwan Strait, dealers said.

Taiwan International Securities analyst Michael Chiang said buying in the TDRs was strong amid optimism toward the recovery of the global shipping industry.

In the first half of this year, the company posted 1.39 billion Chinese yuan (US$204 million) in net profit, up 27 percent from a year earlier, with earnings per share (EPS) at 0.38 Chinese yuan.

Last year, its net profit totaled 2.29 billion Chinese yuan, with EPS at 0.63 Chinese yuan.

Yangzijiang has been listed on the Singapore Exchange (SGX) Main Board since April 2007 and its market value and profits lead the “dragon stocks,” a term that refers to Chinese companies listed on the SGX.

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