China's Yangzijiang share sale 'milestone' for Taiwan

The Taiwan Stock Exchange said a Chinese-owned company will sell shares in the island for the first time next month, paving the way for China stock listings and underscoring improving ties between the two economies.

Yangzijiang Shipbuilding Holdings Ltd, China’s fourth-biggest shipbuilder whose shares are traded in Singapore, may raise as much as NT$4.56 billion ($143 million) from listing Taiwan depository shares, according to its main underwriter SinoPac Securities Co. The price range of the offering is between NT$17 and NT$19 for 240 million TDRs and the securities will be sold from today until Tuesday, according to SinoPac.

“This is definitely a milestone for Taiwan,” Stanley Chu, a spokesman at the Taiwan Stock Exchange, said by phone in Taipei. “Our next step is to get red chips to list in Taiwan. Hopefully that will happen by the end of the year.” Red chips are Chinese companies incorporated overseas and traded in Hong Kong.

Yangzijiang is the first Chinese-majority owned company to list in Taiwan, the exchange said, bolstering Taiwan President Ma Ying-jeou’s two-year drive for improved relations between China and Taiwan. Tensions between the two sides have eased since Ma took office in May 2008, dropping the pro-independence stance of his predecessor and making economic relations with the mainland the priority of his administration.

Taiwan’s stock index rose the most since 1991 on April 30 last year after the island allowed Chinese investments for the first time since the civil war ended. The Taiex has declined 5.5 per cent this year after rallying 78 per cent last year.

Yangzijiang increased 1.3 per cent as of 11.43 am in Singapore trading, extending a 26 per cent surge this year, compared with a 1 per cent gain for the Straits Times Index.

The bourse had been increasing efforts to get more listings on the island. Last year it attracted companies that operate on the mainland while being controlled by Taiwanese investors such as Tingyi (Cayman Islands) Holding Corp and Want Want China Holdings Ltd.

China regards Taiwan as part of its territory and has threatened to invade if the island declares formal independence. The two sides have been ruled separately since Chiang Kai-shek’s Kuomintang, or Nationalists, fled to the island after being defeated by Mao Zedong’s Communists in 1949.

“Chinese companies listing in Taiwan makes it convenient for local investors who like mainland companies,” said Alan Ho, who helps oversees NT$460 million for Union Securities Investment Trust Co’s Union China Fund. “This also shows the closer relations both sides are having.”

Newyard Worldwide Holdings and Lido Point Investments Ltd. are the top two investors in the company, according to data compiled by Bloomberg.