TWSE Market Insights

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In order to promote Taiwan into an Asian asset management center, Chairperson Jin-Lung Peng of the Financial Supervisory Commission (hereinafter referred to as the FSC) proposed five specific plans on September 10, 2024, with the key points as follows: 1. the plan of strengthening asset management and the proposal to establish a special financial zone; 2. the plan of integrating inclusive finance and sustainability to support the Taiwan Investment and Savings Account (TISA) for individuals; 3. the plan of wealth management promotion to promote family office institutions; 4. the plan for capital investment in public construction to guide private capital investment; 5. the plan of expanding investment in Taiwan to guide capital investment in national strategic goal related industries.

The FSC stated that it will achieve such policy goals through a six-year and three-stage plan, with two years for each stage to achieve “feeling the changes in two years, seeing the changes in four years, and achieving the goals in six years.” The stage of “feeling the changes in two years” will be achieved through large-scale regulatory loosening as well as market adjustments and cross-departmental cooperation, with nearly 40 regulations to be adjusted. The stage of “seeing the changes in four years” aims to significantly increase the size of Taiwan’s asset management and market participants. In the stage of “achieving the goals in six years,” it is expected that the achievements may win international recognition, and the market may possess regional competitiveness to become an Asian asset management center with Taiwanese characteristics.

In line with the government’s development policy, the Taiwan Stock Exchange (hereinafter referred to as the TWSE) plans to focus on three major strategies, including assisting securities issuing companies in their international development, launching diversified products to promote market development, and promoting international cooperation and cultivating market professionals together with institutions. A total of 13 work items will be launched, and through rolling adjustments, a dual focus of retaining funds and attracting investment will be adopted for investment in Taiwan and support of its industries, so as to attract more international capital and cultivate cross-disciplinary international financial talents to achieve the goal of building Taiwan into an Asian asset management center. Below is an introduction to the three major strategies and related promotion plans：

• Strategy 1: Assist securities issuing companies in their international development

  • Work item (1)：Promoting high-quality domestic and foreign enterprises to join Taiwan’s capital market

    • The TWSE consolidates existing industries and focuses on emerging industries through the dual driving forces of the general board and the innovation board, and complies with national policies to promote industrial development, such as developing military, security and control, and communication industries based on semiconductor and AI industries, and focusing on the development of emerging industry clusters, such as biotechnology and healthcare, digital cloud, green energy, and environmental protection, to improve industrial chain connections, and accelerate enterprise growth and financing opportunities.

      The TWSE will also expand opportunities for industrial chain cooperation through various summits and forums to leverage the synergy of the big leading the small, and drive the development of emerging industry clusters and respond to national policy promotion by working together with public departments, associations, or new ecosystems to assist in Taiwan’s industrial transformation and upgrading.

  • Work item (2)：Constructing a friendly financing environment for issuing companies in the capital market to conduct international mergers and acquisitions or strategic cooperation
    • The TWSE continues to pay attention to and grasp the trend of the international capital market, promptly discusses strategies that are conducive to the development of Taiwan’s capital market, adjusts regulatory systems and measures to keep pace with the times, assists enterprises in taking root in Taiwan, and continuously improves the capital market fundraising environment to provide the funds required for the international development of listed companies, so as to steadily develop and conduct mergers and acquisitions or strategic cooperation, expand the market size, and promote the vigorous development of Taiwan’s capital market.
  • Work item (3)：Enhancing the visibility of high-quality securities issuing companies, and increasing the attention of domestic and foreign investment institutions and asset management companies
    • The TWSE will enhance the visibility of quality companies by regularly holding domestic themed performance presentations of listed companies. At the same time, it will collaborate with intermediary institutions such as domestic and foreign securities firms to conduct investment promotion activities abroad, and establish communication channels of listed companies for international investment institutions and asset management companies. In addition, the TWSE will host large-scale Taiwan investment forums domestically to not only facilitate communication between securities issuing companies and institutional investors, but also strengthen exchanges between domestic and foreign institutional investors, share the development strategies of listed companies, and enhance market attention.
  • Work item (4)：Assisting securities issuing companies in aligning their ESG policies with international development trends

    • The TWSE will assist listed companies in grasping the international development trend of ESG, and follow the sustainable development action plan released by the FSC to hold advocacy meetings and workshops to provide relevant disclosure guidelines, reference examples, and Q&As for the reference of listed companies, in order to keep up with international trends. To demonstrate Taiwan’s emphasis on ESG and enhance the visibility of corporate sustainability information, the TWSE has launched a new ESG InfoHub in May 2024. By optimizing the declaration and query functions, and continuously expanding ESG indicators with reference to international standards, the platform aims to improve the ESG database of listed companies and align with international standards, thereby enhancing the transparency and comparability of sustainability information. Furthermore, by strengthening the management of ESG information assurance institutions, the quality of sustainability information reporting for listed companies can be improved.

      In addition, the TWSE actively assists enterprises in conducting inventory and disclosure of greenhouse gas scopes 1 and 2, and encourages them to further disclose emission data for scope 3, in order to more comprehensively respond to the requirements of stakeholders. To further assist enterprises in efficiently and uniformly disclosing their ESG information, the TWSE plans to establish a sustainability report production assistance function on the ESG platform to directly input the declared database indicators into the system, and provide templates and guidelines for various disclosure items to assist enterprises, so as to reduce the burden of manpower and costs, and assist listed companies in preparing and filing their sustainability reports.

  • Work item (5)：Guiding TWSE- and TPEx-listed companies to enhance their corporate value, in order to attract more international capital inflows and strengthen their ability to create long-term value

    • To promote the enhancement of corporate value by TWSE- and TPEx-listed companies, the TWSE has added new provisions to the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies,” and formulated the “Reference Example for Corporate Value Enhancement Plan” for reference by companies. Listed companies are encouraged to formulate and disclose operational strategies and business plans, annually analyze market evaluation indicators such as cost of capital, profitability and price-to-book ratio, as well as corporate governance, clarify specific measures to enhance enterprise value in the short, medium, and long term, including capital expenditures, research and development costs and human capital, and actively interact with shareholders and stakeholders to enable investors to fully understand the current situation and future plans of the company as a reference for investment.

      In addition, to encourage listed companies to disclose their plans, the TWSE will add a “Corporate Value Enhancement Plan” section to the “Investment Zone” of the Market Observation Post System (MOPS) in October 2024 to facilitate investor inquiries, and will hold advocacy meetings throughout Taiwan from October to November to enhance the understanding of this plan among listed companies.

      Lastly, to increase the incentives for corporate disclosure, the TWSE plans to include “Specific Measures to Enhance Corporate Value” in the “Q&A for Listed Companies’ Holding of Briefings to Corporate Investors” to increase disclosure channels, and plans to propose it as a corporate governance evaluation indicator in the meeting of the Corporate Governance Evaluation and Advisory Committee.

  • Work item (6)：Promoting the IR ESG engagement platform to assist in improving the connectivity between small and medium listed companies and institutional investors

    • In order to actively encourage the communication and engagement of listed companies (especially small and medium companies) with investors, and to increase the frequency and information link of briefings to corporate investors, Taiwan Index Plus, a subsidiary of the TWSE, plans to establish an IR ESG engagement platform (IR Engage), which is designed from the user’s perspective to provide three major services, including services for briefings to corporate investors, ESG value-added service information, and engagement and matchmaking services.

      Firstly, by integrating the resources of the TWSE and securities firms, more free venues and services for briefings to corporate investors will be provided to enterprises, thus reducing their burden in the preparation for such briefings and increasing their frequency, and thereby increasing the exposure of enterprises and strengthening their relationship with investors. Secondly, ESG value-added information services may assist institutional investors in applying them to the investment process for sustainable responsible investment. ESG data analysis may also support the engagement between investors and companies, and assist in the implementation of responsible investment and stewardship. Lastly, the matchmaking service is carried out with electronic means to facilitate the engagement between institutional investors and listed companies, thus enhancing the opportunities for two-way communication between listed companies and institutional investors and strengthening the corporate ESG role.

• Strategy 2: Launch diversified products to facilitate market development
  • Work item (1)：ETF related products

    • In compliance with the regulatory authorities’ opening up of active ETFs and passive multi-asset ETFs, the TWSE facilitates the establishment or expansion of the business bases of foreign investment trusts in Taiwan to cultivate talents, and provides consulting services such as index design, product planning, and market system according to the needs of industry participants, in order to expand the product line and asset scale.

      In addition, in order to facilitate the introduction of international investors into Taiwan’s ETF market, the TWSE provides talent training and business consulting services for international investors, and assists in the construction of relevant systems, so as to facilitate their participation in the issuance of active ETFs and passive multi-asset ETFs, and thus the cultivation of local talents. Lastly, in order to diversify the products, the TWSE will continuously collect information on the development trends of foreign portfolio funds and target date funds, and develop feasibility reports accordingly, with the aim of improving market liquidity through diversified products.

  • Work item (2)：Fund-structure REIT products

    • The TWSE has proposed a draft revision of listing and trading regulations in accordance with the Securities Investment Trust and Consulting Act (the parent law) and its eight sub-acts, and continues to cooperate with the regulatory authorities and the Securities Investment Trust and Consulting Association (SITCA) to promptly provide industry participants’ opinions to the regulatory authorities for its reference and planning of relevant websites and information declaration and monitoring systems.

      After the regulations are passed, the TWSE will also proactively consult or visit industry participants to assist in their understanding of the content of the law revision, and promote the establishment of real estate investment trust enterprises and the issuance of related products; it will also request via mail the support from the Labor Retirement Fund and insurance funds. The TWSE will also collaborate with external experts (including TPEx, lawyers, CPAs and SITEs) to form a team for public construction securitization products, in order to discuss the feasibility of promoting public construction REITs. In the preliminary plan, the team will analyze regulatory restrictions, identify investable projects, conduct profitability evaluations, and propose legislative revisions, feasible solutions, and related supporting measures.

  • Work item (3)：Cross-border products and cooperation

    • Regarding the study of mutual listing of ETFs, the TWSE has recently reviewed the relevant regulations on the listing approval and information disclosure of feeder ETFs, and plans to provide the norm for information disclosure revision as a reference for those willing to issue cross-border ETFs between Taiwan and Japan, in order to facilitate their evaluation and pre-planning. In order to understand local industry participants’ willingness to introduce Japanese ETFs, the TWSE is closely cooperating with the Tokyo Stock Exchange to proactively grasp the willingness of Japanese asset management companies to issue cross-border ETFs in Taiwan. At the same time, it is assisting the Tokyo Stock Exchange in understanding the willingness of Taiwanese companies to list cross-border ETFs in Japan, and actively providing consultation and assistance to expand overseas markets.

      In addition, the TWSE will continue to comply with the regulatory authorities’ policies, understand the willingness of industry participants to issue cross-border ETF products from other countries, and actively handle the collection and comparison of regulatory data from other foreign markets to develop the listing of cross-border ETFs from other countries. The TWSE will also continue to collaborate with international index companies to compile ESG themed indices to enrich the options for domestic and foreign financial institutions to issue Taiwan stock products.

  • Work item (4)：Assisting securities firms in their development
    • The TWSE will study the open-up of regulations for securities firms to set up simplified branch offices, in order to encourage them to set up simplified branch offices and increase their wealth management service bases by reducing operating margin and eliminating the need to deposit settlement funds, so as to develop customer sources and provide more real-time services. In terms of product types, the TWSE will discuss with the Securities Association to widen the scope of products applicable to customers for the adoption by regulatory authorities, and meet customers’ asset allocation needs and enhance their willingness to trade through product diversification. In terms of regulation relaxation, the TWSE will accordingly adjust the business threshold and customer qualification restrictions for securities firms to engage in trust wealth management, in order to allow more securities firms to apply for the wealth management business and increase the number of target customers. The TWSE will start from these three aspects above to assist the competent authority in achieving the target of the wealth management business expansion plan.
  • Work item (5)：Building an integrated and transparent Investment InfoHub, and actively conducting investor advocacy to practice inclusive finance

    • The TWSE launched Investment InfoHub in July 2023 which integrates the essential data of the official website of the TWSE, the MOPS, and the Market Information System, to provide investors with an integrated one-stop information platform. To continuously collect user feedback, a 2.0 version of the website was launched in June 2024 based on user suggestions. In addition to adding the information of day trading and supervision, it enhances the visual analysis and comparison function, as well as the user-friendly mobile device interface.

      The TWSE will promote this platform to investors through advocacy meetings, and provide investors with more convenient tools for information collection. In the future, the TWSE will collect user needs and continue to improve this platform. Furthermore, the TWSE will enhance investors’ understanding of the risks and characteristics of various products through diverse channels, including but not limited to lectures, online courses, social media, and audio-visual platforms, in order to practice inclusive finance.

• Strategy 3: Promote international cooperation and cultivate market professionals together with institutions
  • Work item (1)：Promoting international cooperation among exchanges
    • The TWSE will divide this into three stages from near to far. Firstly, for exchanges in the Asia Pacific region, it will continue to consolidate friendly relationships with exchanges in Japan, South Korea and Singapore, and cooperate in various aspects such as products, technology, talent, and marketing. Secondly, for the ASEAN exchanges related to the New Southbound Policy, the TWSE will carry out technical guidance or business experience sharing as needed based on business exchanges. Finally, for exchanges in other regions, the TWSE will strengthen communication and interaction with various exchanges by actively participating in international organizations’ conferences and various platforms.
  • Work item (2)：Collaborating with the Securities Association, Futures Association, SITCA, Securities & Futures Institute, and Taiwan Academy of Banking and Finance, in order to plan the cultivation of asset management and international talents in Taiwan in a systematic manner
    • In addition to increasing the number of international financial institutions and asset management companies to expand their businesses and allocate professional personnel in Taiwan through the enhancement of the international reputation of quality listed companies and provision of attractive and diversified products, the TWSE will actively cooperate with institutions such as the Securities Association, Futures Association, SITCA, Securities & Futures Institute, and Taiwan Academy of Banking and Finance to provide resources and systematic training as well as more assistance in cultivating professional talents needed by the market.

In summary, in order to comply with the goal of the FSC to promote Taiwan as an Asian asset management center, the TWSE has formulated clear strategies and action plans to fully support the growth and internationalization of Taiwan’s capital market by assisting securities issuing companies in their international development, launching diversified products to promote market development, and promoting international cooperation and cultivating market professionals together with institutions.

The promotion of these measures will not only help retain domestic asset management talents, attract international capital inflows, and enhance the depth and breadth of Taiwan’s capital market, but also cultivate cross-disciplinary financial professionals and enhance Taiwan’s competitiveness in the global asset management field. Adhering to the goal of “feeling the changes in two years, seeing the changes in four years, and achieving the goals in six years,” the TWSE believes that with the joint efforts of the government, industry and market, Taiwan will definitely become an Asian asset management center with regional competitiveness and characteristics, which will create a new milestone for Taiwan’s economic development.