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June 24, 2017

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Experts urge prudence in issuing 'T-shares'

Experts yesterday urged the government to take precautions against the issuing of so-called "T-shares," stocks issued in Taiwan by mainland Chinese corporations.

Earlier this week, the government fleshed out an idea of allowing the listing of Taiwan businesses that are registered in China and overseas companies in which Chinese capital holds a 30-percent stake, in an effort to boost and revitalize Taiwan's stock market. The idea is similar to the issuance of "H-shares" in Hong Kong by Chinese firms.

But according to Chinese analysts, H-shares trading has its share of problems, most of which are also reflected in Taiwan through the issuance of Taiwan depository receipts (TDR) by overseas companies.

"Taiwan needs to consider this carefully and make careful assessment," they said.

According to analysts, there are many problems facing the trading of H-shares, such as their vulnerability to speculation. Another problem is the price difference between H-shares and shares traded by their parent corporations in China.

"Many of these problems exist in Taiwan's TDR market," experts said.

Separately, local experts gave a positive assessment to the trading of T-shares, yet urged the government to fix some of the loopholes before such shares are issued.

"Given the kind of internationalization with which Taiwan people manage their wealth, diversifying products in the market is absolutely the right thing to do," said Chuang Tai-ping, secretary-general of the island's securities trading association.

"Yet the government needs to monitor Chinese companies carefully, especially after several incidents in which Chinese firms inflated and falsely reported their financials," he added.

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