The Cabinet will also remove the 10 percent investment limit on Hong Kong-listed shares of Chinese companies, including Hong Kong-listed H shares and red chips. This means that the island’s mutual funds can put 100 percent of their assets in the so-called H shares, and red-chip shares, it said in statement issued after a weekly meeting.

“The Cabinet approved the plan today to help financial companies to expand in markets in China, Hong Kong and Macau,” the statement said.

Late last year, Taiwan issued the go-ahead for onshore funds to invest in Chinese, Hong Kong and Macau stocks, as funds seek opportunities for better returns via some of the world’s best-performing markets.

Meanwhile, the Cabinet said it will examine the restriction on Chinese investors investing in Taiwan Stocks.

Officials with the Cabinet-level Financial Supervisory Commission (FSC) said the government plans to allow China’s qualified institutional investors to invest in Taiwan stocks and mutual funds by the end of next year.

The Cabinet of new President Ma Ying-jeou approved last week a spate of reforms allowing greater investment in China by the island’s financial firms, furthering opening the fast-growing mainland market to its brokerages, asset managers and others.

The new regulations are part of broader efforts by Taiwan to boost its economy through closer business ties with China.

President Ma Ying-jeou, who took office May 20, has pledged to bolster ties with China to strengthen the island’s economy.

Also yesterday, Susan S.L. Chang, vice chairwoman of the FSC, said that in a bid to develop Taiwan into an Asian financial center, the government will relax relevant rules and regulations governing asset management, fund raising and financial services as much as possible.

Chang said that as long as the Ministry of Economic Affairs relaxes the regulation and that maximum investment made by any Taiwanese enterprise in mainland China cannot exceed 40 percent of the enterprise’s net worth, the maximum investment by Taiwan’s mutual funds in Chinese stocks will be boosted further.

China has been the favorite overseas destination of Taiwan manufacturers, which have pumped more than US$100 billion into mainland investments over the past 20 years, drawn by cheaper labor and land costs as well as strong growth rates.

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