Foreign Listings on Taiwan Stock Exchange

Author Name: 
Chi Schive


As companies increasingly travel across borders for listings and fundraising, stock exchanges too are looking beyond their own markets. What can exchanges do to enhance their positions to attract these companies? In some cases, change must come from within.

Today the stock ticker at the Taiwan Stock Exchange shows over 20 stock securities with abbreviated names beginning with the letter “F”, some of which are represented entirely by English letters; this phenomenal growth has occurred in just the last two years.

Before 2008, there were only five secondary-listed foreign companies issuing TDRs (Taiwan Depositary Receipts); thereafter, primary listings by foreign issuers nearly doubled their numbers year after year, heralding a new era for the bourse. There are now 32 TDRs and 21 IPOs, making TWSE the leading market for foreign companies listing in Asia except Singapore.

Each primary-listed company has its own unique niche and is recognized worldwide. These include TPK, an Apple supplier and global leader of touch modules; ZDT (Zhen Ding Tech.), another Apple supplier and the world’s fourth largest PCB (printed circuit board) manufacturer; and 85°C, famous across mainland China for selling coffee and cake, is making great strides in Australia and the United States. After listing, each of these companies enjoyed higher popularity and solid stock price performance after finding favor with retail and institutional investors.

Why did these foreign companies choose to list here, even with some going as far as to delist from other overseas markets? The key catalyst was the loosening of capital-raising policies by the government in 2008. This attracted companies operating around the world, especially those backed by local capital, and operating in the Greater China area, to return and list on TWSE, invigorating the local capital market.

After loosening policies, returning companies enrich the local capital market

The primary business model of the listed companies is manufacturing, including OEM (Original Equipment Manufacturer) and ODM (Original Design Manufacturer). Since the mid-1980s, these businesses have been in tune with the changing domestic environment and moved production lines to overseas regions with lower operating costs. Most chose to move to Southeast Asian countries in this earlier period, but after the 1990s, many were enticed to invest in mainland China by the lure of favorable tax incentives, lower labor and land costs there. Concurrently, numerous companies going abroad have become large multinationals and now operate as global logistics players.

As a result of long-term efforts, these companies had made great achievements, but needed capital to expand their businesses. However, due to certain considerations, the government used to restrict those solely China-operated companies from coming home for funding by prohibiting capital raised locally from being used in mainland China. This constraint forced quite a few to list on overseas markets; there are more than 100 such overseas listings to date, mostly in Hong Kong and Singapore.

After President Ma Ying Jeou took office in 2008, there has been a thawing in the cross-strait relationship. To encourage our companies to come back to list on the domestic capital market, the government has loosened limitations on capital raised; permitted overseas registered companies backed by domestic capital to list on TWSE as foreign companies; and allowed companies listed on other markets to issue TDRs.

This series of policies has provided companies operating overseas with a notable opportunity to return home and re-engage, or engage directly with the local business community, just as salmon return from the ocean to the river of their birth.

As of August 2012, 778 of the 831 companies listed on the Taiwan Stock Exchange are domestic companies, 80% of these have had investment interests in mainland China, with total investments reaching more than US$39 billion as of Q1 2012. On top of that amount, 21 are primary-listed foreign companies; 19 are owned by Taiwanese with substantial operations in mainland China, and two are U.S. companies. In addition, there are 32 foreign TDR issuers, or secondary-listed companies, of which 40% are local companies. With such a large number of overseas local companies coming home, the domestic capital market is flourishing. It is truly easy for foreign companies to take advantage of a TWSE listing.

‘Cluster effect’ attracts foreign-funded enterprises to list in TWSE

The first foreign enterprise listed in TWSE was an American company IML, the main supplier of iPad electric IC. The second one CoAdna, is the third-largest manufacturer of WSS (wavelength selective switches). Secondary-listed foreign companies include Singapore-listed Dukang Distillers Holdings, the first overseas-listed Chinese wine branded manufacturer and Yangzijiang Shipbuilding, the largest private Chinese shipyard and the largest ‘S-Chip’ by market value. Japan’s Elpida Memory Inc., the third largest DRAM manufacturer, had also pursued a secondary listing on our market.

One of the reasons that led these foreign-funded enterprises to list here is the market’s higher turnover rate and P/E ratios. Other non-financial market factors include the dominant role we play in strong supply chains and R&D capabilities. These enterprises believe that building a relationship with the domestic capital market can produce stronger industrial links to their local counterparts and hence help expansion in other markets.


With the cross-strait economic relationship prospering even more rapidly after the signing of ECFA (Economic Cooperation Framework Agreement), foreign enterprises, especially in Hong Kong, Singapore and Japan continue to engage in the practice of seeing TWSE as the gateway to China, in addition to raising capital.

So far, with 36 foreign-funded enterprises in the pipeline for primary listing, the Taiwan Stock Exchange is gaining momentum as an increasingly popular listing venue. Looking forward, our capital market will be opened to Chinese-funded enterprises eventually, adding yet another dynamic dimension in the market.

About the author :

Dr. Chi Schive, Chairman of Taiwan Stock Exchange Corporation; Adjunct Professor of National Taiwan University. Born in Chongqing, China, June 1947; He was awarded his Ph.D. in Economics at Case Western Reserve University (U.S.) in 1978. Prior to his current position, he was the President, Taiwan Academy of Banking and Finance (2000-2007); Vice Chairman, Council for Economic Planning and Development (CEPD), Executive Yuan (1993-2000); Chief negotiator at General Agreement of Trade in Services (GATS) for Taiwan’s accession to the World Trade Organization (WTO) (1994-1999); Vice Chairman of the Economic Committee of Asia-Pacific Economic Cooperation (APEC) (1995-1998); Chair and Professor, Department of Economics, National Taiwan University (1990-1993); Dean, Director, and Professor, College of Management, Graduate Institute of Industrial Economics, National Central University (1985-1988); Visiting Professor, Free University, Berlin (1990); Visiting Scholar, Hoover Institute (1986); Visiting Scholar, Harvard-Yenching Institute (1984-1985)