Small investment program to kick off on Jan. 16

A plan that makes expensive stocks and other securities more accessible to retail investors will be launched on Jan. 16, according to the Taiwan Stock Exchange (TWSE).

Under the plan, which was recently approved by the Financial Supervisory Commission (FSC), Taiwan’s financial regulator, retail investors will be able to invest fixed amounts at regular intervals in stocks and exchange traded funds.

The small investment program was designed in response to complaints from retail investors who said they could not afford such expensive stocks as smartphone camera lens supplier Largan Precision Co. (大立光), which closed at NT$3,790.00 (US$118) on Friday.

Shares in Taiwan are usually sold in minimum blocks of 1,000 shares, meaning investors would have to spend at least NT$3.79 million to buy Largan stock, an amount often out of their reach.

In addition to shares issued by listed companies, the new investment program also includes ETFs, which accounted for 9.26 percent of the total turnover of Taiwan’s stock market, the TWSE said.

The small investment program was one of several measures unveiled by the FSC to increase market turnover after the Executive Yuan proposed a bill to cut the transaction tax on day trading to 0.15 percent, from the current 0.3 percent.

The tax cut is pending legislative approval.

According to the TWSE, the aggregate turnover on Taiwan’s stock market totaled about NT$18.9 trillion in 2016, the lowest level in 15 years. It was also the third consecutive year in which annual turnover has declined.

Average daily turnover in 2016 was about NT$75.5 billion, down more than 18 percent from a year earlier, TWSE statistics showed.

The TWSE said that before the new investment program takes effect, it will hold five seminars on the plan in northern, central and southern Taiwan to brief employees of securities firms about it.

The seminars are also expected to help the local securities sector revise its computer systems to accommodate the new investment plan, the TWSE said.

The small investment program will be similar to a regular savings plan for investors who put their money into mutual funds. The system, called the dollar-cost averaging method, is expected to offset market risk over the long run on the market.

The exchange said the method will be appropriate for investors who are keen to hold a stock for the long term.

Source: Focus Taiwan News Channel

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