Taiwan Stock Exchange (TWSE) has granted approval to three exchange-traded-funds (ETFs) tracking the performance of Topix indices series issued by Fubon Securities Investment Trust (Fubon SIT), as a first move towards the creation of a Taiwan-Japan ETF connect. Index licence approval has been received from the Tokyo Stock Exchange.

There is the possibility for co-marketing between TWSE and Japan Exchange Group “to run roadshow of companies’ initial public offerings”, said Chao-zon Yang, senior executive vice-president at the TWSE.

One ETF will be linked to the Tokyo Stock Price Index and the other two to the Topix Leveraged 2x Index and Inverse 1x Index, according to TWSE. All three ETFs will be denominated in TWD and able to be listed in the second half of this year.

“This is the first step towards a Taiwan-Japan ETFs connect,” said Rosemary Wang (pictured), deputy director general at Taiwan’s Securities and Futures Bureau. “After the first phrase of listing ETFs linked to the Japanese stock index, we will start to promote the cross-listing and allow investors from both markets to have access to overseas ETFs.”

Besides the local stock index, underlyings of Taiwan ETFs also include Hong Kong and China stockmarket benchmark indices, said Wang. “Japanese investors will have the opportunity to access Taiwan-listed ETFs that track China’s capital markets,” she said.

There is, as yet, neither a schedule for the ETF co-listings nor any licensing requirement from Japan.

All three indices for the new ETFs are compiled and maintained by the Tokyo Stock Exchange, with the Tokyo Stock Price Index including all the listing companies within the exchange. The Topix Leveraged 2x Index doubles the performance of the price index, with the inverse 1x index offering the index performance in reverse.

The mutual stock trading platform between Taiwan and Singapore will be activated in June to attract more overseas investors to Taiwan’s stockmarket, according to Ming-chung Tseng Taiwan, chairman of the Financial Supervisory Commission, speaking at a local press conference. The top 150 Taiwanese shares by market capitalisation will be included in the platform.

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