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Socially Responsible Investments in APAC emerging markets

State of the art updated on may 21, 2008

MATERIALE NPV – RIPRODUZIONE VIETATA


MACROECONOMICS ANLYSIS OF THE FINANCIAL SECTOR IN TAIWAN

 Taiwan at a glance

 Financial market overview

 Banking sector

 Stock market

 Bond market

 Development issues

2008 05 21 – SRI in APAC Emerging Markets MATERIALE NPV – RIPRODUZIONE VIETATA


TAIWAN AT A GLANCE

Territory
- 31,688 km2
Population
- 22.95 million
Capital
- Taipei
Government System
- Democracy
Administrative Divisions
- 2 municipalities / 16 counties / 5 provincial cities
Currency
- TWD, semi-flexible exchange rate, 1 EUR = 47.865TWD (2008.05.23)
Languages
- Mandarin, Taiwanese
Ethnicities
- Han (92%) and Taiwanese aborigines (2%)
Religion
Buddhism, Islam, Taoism, Christianity

3
Source : China Statistical Yearbook, NPV analysis
2008 05 21 – SRI in APAC Emerging Markets MATERIALE NPV – RIPRODUZIONE VIETATA
TAIWAN AT A GLANCE
- ECONOMIC DEVELOPMENT
Taiwan GDP 2000 - 2008  Taiwan is the 21th largest economy in
USD Million % the world (2006*)
GDP (million US) GDP Growth Rate
450,000 7.00
413,164  Considering the GDP per capita,
6.15 6.00
400,000 5.77
365,503
383,303
5.70 Taiwan is the 36th in the world in 2006
355,958
350,000
321,230 4.64 331,007 4.89 5.00
( at $USD 16,274 )
305,624 4.16 4.32
291,694 297,668 4.00
300,000 3.50  Taiwan’s 2007 GDP amounted to
3.00
250,000 $USD 383,303 million, along with a
2.00
200,000 consistent growth since 2002. The
1.00
150,000
CAGR of Nominal GDP in 2000-2007 is
0.00
??? %
100,000
-1.00

50,000
 Taiwan’s growth has consistently
-2.17 -2.00
(except 2001) been higher than CPI
0 -3.00
2000 2001 2002 2003 2004 2005 2006 2007 2008 E inflation, indicating a positive real
growth
GDP Growth rate and CPI¹ 2000-2008
7.00  Economic Outlook for 2008:
6.00 6.15
5.77 5.70 The latest world economic projection
5.00
4.64 4.89
4.00 4.16 4.32 shows that the growth of global economy
3.86
3.50
3.00 may be moderately slow in 2008.
2.00 2.31
1.61 1.80 Taiwan’s export is anticipated to mildly
1.00 1.25
0.60 increase. With the improving domestic
0.00 -0.01 -0.20 -0.28
-1.00 2000 2001 2002 2003 2004 2005 2006 2007 2008E* sector contribution, real GDP is predicted
-2.00
-2.17 to grow by 4.32% in 2008.
-3.00
4
Source :DGBAS, NPV analysis *: until 2008/ April
2008 05 21 – SRI in APAC Emerging Markets MATERIALE NPV – RIPRODUZIONE VIETATA
INDEX

 Taiwan at a glance

 Financial market overview

 Banking sector

 Stock market

 Bond market

 Development issues

2008 05 21 – SRI in APAC Emerging Markets MATERIALE NPV – RIPRODUZIONE VIETATA


FINANCIAL MARKET OVERVIEW
- HISTORY
 Over the second half of the 20th century, Taiwan has transformed itself from a predominantly agrarian economy
into a vigorous industrialized economy, a process that may be summarized in three main phases:
 Taiwan’s economy transform has gone through three phases of development:

In 1949, the Central Bank relocated with the government from Mainland China to
Phase 1: 1949 to 1980 Taipei . A highly successful land reform program launched Commonly, bonds
Shift from Agriculture to issued by the government as compensation for the agricultural lands confiscated
Manufacturing and redistributed were utilized by the former landlords as collateral to secure loans
with which they started up manufacturing and other businesses.

Beginning in the 1980s, the government implemented a series of measures to


Phase 2: 1981 to 1999 liberalize and internationalize the economy and privatize state-run enterprises.
Ongoing Industrial Development Labor-intensive industries, once the mainstay of Taiwan's economy, gave way to
technology- and capital-intensive industries.

Globalization, trade liberalization, and the rise of neighboring China as an


Phase 3: from 2000 onwards economic power pose new challenges for Taiwan's economic development in the
Reform for Sustainable new century. To meet them, the government has taken measures to upgrade
Development Taiwan's industries, implemented financial reforms to foster a more attractive
investment environment.

6
Source :Taiwan Yearbook 2007, NPV analysis
2008 05 21 – SRI in APAC Emerging Markets MATERIALE NPV – RIPRODUZIONE VIETATA
FINANCIAL MARKET OVERVIEW
- RECENT DEVELOPMENT
 2 phase financial reforms have been conducted from 2000 :
Background
 Taiwan opened its market for new banks in the early 1990s. As a result, 16 new banks were established and left
behind an “over-banking” problem. More specifically, while market competition stimulated the development of
the financial markets, the overly competitive banking market deteriorated banks’ asset quality, narrowed their
interest spread and reduced profit margin from them.

 For example, the market share of the top 5 banks in Taiwan only accounts for 38%, while the figures in Korea
and Hong Kong are 87% and 76% respectively. In other words, Chinese Taipei lacked big and good banks.

 Over-regulation was another problem in our financial market. Previously, banks were considered as policy tools
aiming to support our manufacturing industry. This situation inevitably restricted the effectiveness of market
mechanism and limited the competitiveness of our financial markets.

PhaseⅠof Financial Reform (started in 2000)

 The goal of the first reform aimed at resolving the non-performing loan problems.
 For the purpose, the previous financial regulator, the Ministry of Finance (MoF), lowered business tax of
financial institutions from 5% to 2% and the Central Bank lowered deposit reserves to encourage bad debt
write-offs.
 The Ministry of Finance established the Financial Restructuring Fund (or RTC fund) and created Asset
Management Companies to deal with distressed financial institutions and resolve their deteriorated assets.

Source :Financial Supervisory Commission , NPV analysis 7

2008 05 21 – SRI in APAC Emerging Markets MATERIALE NPV – RIPRODUZIONE VIETATA


FINANCIAL MARKET OVERVIEW
- RECENT DEVELOPMENT
 The MoF enacted the Financial Institution Merger Act and the Financial Holding Company Act to create a better M&A
legal environment and lessen the adverse effect of over-banking.

 The results of the first reform are significant. The average NPL ratio of domestic banks reduced from 11.27% in
2001 to 2.39% in June 2006.

 In addition, 14 financial holding companies have been established since 2001. However, since there are only few
M&A deals in recent years, the number of our banks is still large.

 To promote integrated financial supervision, we have also enacted a law aiming at the integration of several
supervisory agencies. The Financial Supervisory Commission was established on July 1, 2004 to consolidate the
supervision of banking, securities and insurance sectors, and to act as a single regulator under the Executive Yuan.

PhaseⅡof Financial Reform (started in 2004 till now)

 The key objective of phaseⅡfinancial reform is consolidation and promoting Taiwan as a regional fund-raising and
asset management center.

 The four goals of market consolidation are: (1) three banks with market share over 10% by the end of 2005; (2) halving
the number of state-owned banks by the end of 2005; (3) reducing FHCs (4)financial institutions with foreign investment.

 To speed up financial M&As, the FSC has been trying to create an environment beneficial for consolidation, not only for
domestic financial institutions but also for foreign investors.

 It revises outdated regulations to be in line with international norms, implements differentiated supervisory measures to
encourage well-performing financial institutions, and offers incentives for consolidation. .
8

Source :Financial Supervisory Commission , NPV analysis


2008 05 21 – SRI in APAC Emerging Markets MATERIALE NPV – RIPRODUZIONE VIETATA
FINANCIAL MARKET OVERVIEW
- BREAKDOWN OF FINANCIAL SERVICE INDUSTRY

% Of Total Nominal GDP

10.04 2007

9.98 2006

10.43 2005

10.52 2004

10.56 2003

0% 20% 40% 60% 80% 100%

Financing Insurance Securities and Futures

• Financial Service Industry accounts for around 10% of total GDP.


• Financing, Insurance, and Securities and futures represents 65.7%, 24.6% and 9.7% of total
financial market.
• Financing has been decreasing gradually from 2003-2007
9
Source :CSRC, CBRC, NPV analysis
2008 05 21 – SRI in APAC Emerging Markets MATERIALE NPV – RIPRODUZIONE VIETATA
FINANCIAL MARKET OVERVIEW
GDP & Capitalization (2002-2007)

NTD (billion)
25000 180.00%
160.00%
20000 140.00%
120.00%
15000
100.00%
80.00%
10000
60.00%

5000 40.00%
20.00%
0 0.00%
2002 2003 2004 2005 2006 2007

GDP Market Capitalization Stock Market Capitalization To GDP Ratio

• Market Capitalization start to surpass GDP from 2003


• Market Capitalization is growing faster than GDP
• Stock Market Capitalization to GDP Ratio keeps growing from 2002 (89.22%) to 2007 (171%)

Source :Taiwan Stock Exchange , NPV analysis 10

2008 05 21 – SRI in APAC Emerging Markets MATERIALE NPV – RIPRODUZIONE VIETATA


MACROECONOMICS ANLYSIS OF THE FINANCIAL SECTOR IN TAIWAN

 Taiwan at a glance

 Financial market overview

 Banking sector

 Stock market

 Bond market

 Development issues

11

2008 05 21 – SRI in APAC Emerging Markets MATERIALE NPV – RIPRODUZIONE VIETATA


- STRUCTURE 1/5
BANKING SECTOR

Executive Yuan

Central Bank of R.O.C Financial Supervisory Commission


(Taiwan) ( Regulator )

  Banking Bureau
Domestic Banks
  Securities and Futures Bureau

Local Branches of Foreign   Insurance Bureau


Banks
  Financial Examination Bureau
Credit Cooperatives
  Supportive Departments :
- International Affairs Departments
- Legal Affairs Department
Taiwan Post Co. - General Planning Department
- IT Department
- Secretary Office
Credit Departments of Farmers’
& Fishermen’s Associations

12
Source :FSC, NPV analysis
2008 05 21 – SRI in APAC Emerging Markets MATERIALE NPV – RIPRODUZIONE VIETATA
BANKING SECTOR
- STRUCTURE 2/5
Central Bank - Central Bank of the Republic of China (Taiwan)

 In December 1949, the Bank relocated with the government from Mainland China to Taipei

 In November, 1979, the newly revised Central Bank of China Act was promulgated. While the Bank has
since been under the Executive Yuan (Cabinet), its independent role in making monetary policy has
not been changed.

 the Bank's operational objectives include promoting financial stability, ensuring sound banking operations,
maintaining the stable internal and external value of the currency and, within the scope of the above three
objectives, fostering economic development.

 The main functions of CBC:



Monetary Management

Foreign Exchange Management

Clearing and Settlement Service

Currency Issuance

Treasury Agency Functions

Bank Examination

Statistics and Research

Participation in International Organizations ;

13
Source :CBC, NPV analysis
2008 05 21 – SRI in APAC Emerging Markets MATERIALE NPV – RIPRODUZIONE VIETATA
BANKING SECTOR
- STRUCTURE 3/5

Regulator: Taiwan Financial Supervisory Commission

 Financial Supervisory Commission (FSC) was inaugurated and commenced operation since 1 July 2004 .

 FSC functions act as a single and independent regulator that directly reports to the Executive Yuan.
 Main goal : consolidate the supervision of banking, securities and insurance industries under one roof, as well as to
integrate the tasks of examining these industries.
 The FSC includes 4 bureaus and 5 supporting departments.
 4 bureaus
- The Bureau of Monetary Affairs
- The Securities and Futures Bureau } responsible for the supervision of financial institutions.
- The Insurance Bureau
- The Examination Bureau is in charge of the examination of all financial institutions.
 It is worth mentioning that the newly organized Examination Bureau integrates examination staff from the CBC*,
BOMA** and the CDIC***, which provides better administrative and human resources to conduct financial examination
under one agency.
 5 supporting departments
- International Affairs Departments
- Legal Affairs Department
- General Planning Department
- IT Department
- Secretary Office

* CBC : Central Bank of Republic of China (Taiwan)


** BOMA : Bureau of Monetary Affairs
*** CDIC : Central Deposit Insurance Corporation 14

2008 05 21 – SRI in APAC Emerging Markets MATERIALE NPV – RIPRODUZIONE VIETATA


BANKING SECTOR
- BANKING ASSETS AND LIABILITIES

billion TWD

45 000

40 000

35 000

30 000

25 000

20 000

15 000

10 000

5 000

0
2003 2004 2005 2006 2007

• As of the year-end 2007, the total assets of the banking sector amounted to TWD 38235 billion, an
increase of RMB 501 billion from 2006.

• During the same period, the total liabilities reached TWD 36069 billion, an increase of TWD 433 billion.

15
Source :CBRC 2007, NPV analysis
2008 05 21 – SRI in APAC Emerging Markets MATERIALE NPV – RIPRODUZIONE VIETATA
BANKING SECTOR
- FINANCIAL INSTITUTIONS ASSETS BREAKDOWN

2007 Domestic Bank

Local branch of
foreign banks
2006 Credit Cooperatives

Bills Finance
Companies
2005
Trust and Investment
companies
Credit Departments of
Farmers' Associations
2004
Credit Departments of
Fishermen's Associations
The Postal Savings System
2003

0% 20% 40% 60% 80% 100%

• Domestic banks occupy the majority of total asset and account for 72.8% of total.

• Local branch of foreign banks keep increasing

• Credit Cooperatives, Bills Finance Companies and Trust and Investment company are decreasing
gradually.

• Credit Departments of Farmers' and Fishermen’s Associations have no significant change


Source :FSC , NPV analysis 16

2008 05 21 – SRI in APAC Emerging Markets MATERIALE NPV – RIPRODUZIONE VIETATA


BANKING SECTOR
- DEPOSITS AND LOANS

billion NTD

30 000 73.0%

25 000 72.0%

71.0%
20 000
70.0%
15 000
69.0%
10 000
68.0%
5 000 67.0%

0 66.0%
2003 2004 2005 2006 2007

Deposit Loan Loan to Deposit Ratio

• As of the year-end 2007, total deposits and total loans outstanding amount to 25245 and 18019 billion,
respectively

• Loan to Deposit Ratio keeps at about 70% in the latest 4 years

17
Source :FSC, NPV analysis
2008 05 21 – SRI in APAC Emerging Markets MATERIALE NPV – RIPRODUZIONE VIETATA
BANKING SECTOR
- NPLs1 OF DOMESTIC BANKS

Billion TWD

900 6.00%
800
5.00%
700
600 4.00%
500
3.00%
400
300 2.00%
200
1.00%
100
0 0.00%
2003 2004 2005 2006 2007

Total NPL NPL Ratio

• The quality of assets improved dramatically due the Financial Reform from 2000.

• By the end of 2007, the NPLs of major commercial banks totals TWD 337.4 billion, a decline of TWD 38
billion from end-2006. The NPL ratio was 1.79 percent, with a decrease of 0.8%

18
Source :FSC , NPV analysis Note 1: Non-Performing Loans
2008 05 21 – SRI in APAC Emerging Markets MATERIALE NPV – RIPRODUZIONE VIETATA
BANKING SECTOR
- ROA and ROE of Domestic Bank

12

10

0
2003 2004 2005 2006 2007
-2

ROA ROE

• ROE reduced dramatically from 10.3% (2005) to -0.43% (2006)

• ROA and ROE decrease from 2005 due to Double-card debt crisis (credit card / cash card ) and over
competition.

19
Source :FSC , NPV analysis Note 1: Non-Performing Loans
2008 05 21 – SRI in APAC Emerging Markets MATERIALE NPV – RIPRODUZIONE VIETATA
MACROECONOMICS ANLYSIS OF THE FINANCIAL SECTOR IN
CHINA

 Taiwan at a glance

 Financial market overview

 Banking sector

 Stock market

 Bond market

 Development issues

20

2008 05 21 – SRI in APAC Emerging Markets MATERIALE NPV – RIPRODUZIONE VIETATA


- STRUCTURE 1/5
Stock Market

Financial market

Taiwan Stock Exchange / TSEC GreTai Security Market / GTSM


(exchange market) (OTC market)

Stock Stock

TDR (Taiwan Depository Receipts) Emerging Stock

  Warrant   Bond

  Bond   Derivative

Beneficiary Certificates

ETF

  Beneficiary Securities

21
Source :TSEC, GTSM , NPV analysis
2008 05 21 – SRI in APAC Emerging Markets MATERIALE NPV – RIPRODUZIONE VIETATA
STOCK MARKET
- REGULATOR ( Exchange Market )
Taiwan Stock Exchange / TSEC

 The CSRC was founded in 1992. It is an institution of the State Council of the People's Republic of China
(PRC). It is the main security (finance) regulator that responsible for conducting supervision and
regulation of the securities markets in accordance with the law

 In August 1997, The State Council decided to put the securities markets in Shanghai and Shenzhen
under the supervision of the CSRC

 In November 1998, Organizations engaged in securities formerly supervised by the People's Bank of China
were put under the centralized supervision of the CSRC

 Product and Service


Stock / TDR (Taiwan Depository Receipts) / Warrant / Bond /Beneficiary Certificates / ETF/ Beneficiary
Security
 Its responsibilities include:

Formulating policies, laws and regulations concerning markets in securities and futures contracts;

Overseeing issuing, trading, custody and settlement of equity shares, bonds, investment funds;

Supervising listing, trading and settlement of futures contracts;

Supervising futures exchanges; securities and futures firms;

Granting the qualification of law firms, accounting firms, asset appraisal firms, and professionals in
these firms

22
Source :CSRC 2007, NPV analysis
2008 05 21 – SRI in APAC Emerging Markets MATERIALE NPV – RIPRODUZIONE VIETATA
STOCK MARKET
- REGULATOR ( OTC Market )

GreTai Security Market / GTSM


The government reopened the over-the-counter trading of bonds in October 1982.
 The Taipei Securities Dealer's Association (TSDA) started handling over-the-counter trading of stocks in

February 1988.
 In 1994, this non-profit organization with the mission to develop the over-the-counter market was named

Gre Tai Securities Market (the GTSM)


 Since its inception in 1994, GreTai Securities Market (GTSM) has been endeavoring to play the role of a
family and aspires to be the "protagonist of economic vitality and the cradle of successful businesses" to
help businesses grow and develop, drive the upgrade of industries and enhance competitiveness in the
international markets.
 Product and Service
Stock / Emerging Stock / Bond / Financial Derivative

23
Source :GTSM, NPV analysis
2008 05 21 – SRI in APAC Emerging Markets MATERIALE NPV – RIPRODUZIONE VIETATA
STOCK MARKET
- OVERVIEW
billion TWD
40000

35000

30000

25000

20000

15000

10000

5000

0
2003 2004 2005 2006 2007
Capital Issued Market Capitalization Trading Value

• From 2003-2007, Taiwan stock exchange market has grown consistently and stably.
• In 2007, the market capitalization reaches 21,527 billion TWD and growth rate is 11.1% from 2006.
• In 2007, the Trading Value reaches 33,527 billion TWD and growth rate is 38.6% from 2006
• In 2007, the Capital Issued reaches 5601 billion TWD and growth rate is 1.4% from 2006

24
Source :FSC Financial Outlook Monthly, NPV analysis
2008 05 21 – SRI in APAC Emerging Markets MATERIALE NPV – RIPRODUZIONE VIETATA
STOCK MARKET
- COMPARISON BETWEEN EXCHANGE AND OTC MARKET
Number of Listing Market Capitalization
TWD (Billion)

800
25000
700
600
20000
500
400 15000
300
10000
200
100 5000
0
2003 2004 2005 2006 2007 0
GTSM TSEC 2003 2004 2005 2006 2007
GTSM TSEC

TWD (Billion)
Trading Value Trading Volume
TWD (Billion)
40000
120000
35000
30000 100000

25000 80000
20000
60000
15000
40000
10000
5000 20000

0 0
2003 2004 2005 2006 2007 2003 2004 2005 2006 2007

GTSM TSEC GTSM TSEC

• TSEC and GTSM occupy 91.89% and 8.11 % of the Market Capitalization respectively in 2007.

• TSEC and GTSM occupy 85.56% and 14.44 % of the Market Capitalization respectively in 2007

• TSEC and GTSM occupy 85.80% and 14.20 % of the Market Capitalization respectively in 2007.
25

2008 05 21 – SRI in APAC Emerging Markets MATERIALE NPV – RIPRODUZIONE VIETATA


STOCK MARKET
- MARKET PERFORMANCE 2007

TAIEX and Trading Volume

• In the first 3 quarters of 2007, both TAIEX


and GTSM Index keeps the growth
momentum in the previous year

• TAIEX opened at 7920 and closed at


8509.56, with a rate of yearly increase
7.39% in 2007.

• GTSM Index opened at 164.71 and


closed at 154.47, with a rate of yearly
decrease 6.22% in 2007.
GTSM INDEX and Trading Volume
• In the 4th quarter, the indices fall down
due to the impact of US sub prime crisis
as well as the concern that the market has
Turnover ( TWD$ 100 million)

Volume-Weighted Index

gone irrational and the bubble is about to


break

26
Source :TSEC , GTSM NPV analysis
2008 05 21 – SRI in APAC Emerging Markets MATERIALE NPV – RIPRODUZIONE VIETATA
STOCK MARKET
- COMPARISON BETWEEN EXCHANGE AND OTC MARKET
P/E Ratio
Turnover Ratio
45.00
40.00
500.00
35.00
30.00 400.00

25.00 300.00
20.00 200.00
15.00 100.00
10.00
0.00
5.00 2003 2004 2005 2006 2007
0.00
2003 2004 2005 2006 2007 STOCK ON TSEC STOCK ON GTSM EMERGING STOCK ON GTSM

STOCK ON TSEC STOCK ON GTSM EMERGING STOCK ON GTSM

Average Earning Per Share Average Market Value Per Share


45.00
3.00
40.00
2.50 35.00

2.00 30.00
25.00
1.50
20.00
1.00 15.00
0.50 10.00
5.00
0.00
2003 2004 2005 2006 2007 0.00
2003 2004 2005 2006 2007
STOCK ON TSEC STOCK ON GTSM EMERGING STOCK ON GTSM
STOCK ON TSEC STOCK ON GTSM EMERGING STOCK ON GTSM

• Emerging Stock on GTSM owns the highest P/E Ratio, but decrease dramatically from 2006 to 2007.

• Stock on GTSM owns much higher turnover rate than the others.

• Stock on TSEC owns the highest Average Earning Per Share and Average Market Value Per Share.
27

2008 05 21 – SRI in APAC Emerging Markets MATERIALE NPV – RIPRODUZIONE VIETATA


MACROECONOMICS ANLYSIS OF THE FINANCIAL SECTOR IN
CHINA

 Taiwan at a glance

 Financial market overview

 Banking sector

 Stock market

 Bond market

 Development issues

28

2008 05 21 – SRI in APAC Emerging Markets MATERIALE NPV – RIPRODUZIONE VIETATA


BOND MARKET
- Overview

 The turnover in the bond market in 2007 reached NT$193,644.6 bi l l ion (convertible bonds
and
corporate bonds with warrant excluded)

 NT$93,178.7 bi l l ion involved out right trades, accounting for 48.12% of total turnover and
representing a decrease of 45.04% as compared to 2006

 Government bonds still represented a lion’s share in outright trade, accounting for as much as
98.74% of all outright trades, followed by corporate bonds with 0.41%, financial debentures with

0.15%, beneficiary securities with 0.17%, strip bonds with 0.07%, and foreign bonds with 0.46%.

 The turnover of RP/RS trades totaled NT$99,857.9 billion in 2007, representing a decrease of
5.49% from NT$105,663.9 billion in 2006.

 Since 2003, practically all outright trades of government bonds went through the GTSM
electronic bond trading system (EBTS). In 2007, the amount of outright trade that went through
EBTS reached NT$88,596.5 billion, accounting for 95.08% of outright trades in the market,

29
Source :Chinabond 2007, NPV analysis
2008 05 21 – SRI in APAC Emerging Markets MATERIALE NPV – RIPRODUZIONE VIETATA
BOND MARKET
- OVERVIEW
Unit:NT$ Billion GTSM Market
250,000

200,000

150,000

100,000

50,000

-
2003 2004 2005 2006 2007
Trading Value Outstanding

• Trading Value started to decrease from 2005, with -16.03% and -24.47% growth rate in 2006 and 2007
respectively.
• Outstanding has kept growing slightly from 2003 to 2007.
• At the end of 2007:
• bond trading volume reaches 133,382 billion
• bond outstanding is 5,612 billion TWD

30
Source :FSC, Securities and Futures Bureau , 2007, NPV analysis
2008 05 21 – SRI in APAC Emerging Markets MATERIALE NPV – RIPRODUZIONE VIETATA
BOND MARKET
- BOND ISSUE BY Product (GTSM)

2007 Government
Bond
Financial Debenture

2006
Beneficiary Securities

Straight Corporate Bond

2005
Corporate Bond
with Warranty
Convertible&Exchangable
Corporate Bond
2004
Foreign Bond

International Bond
2003

Amount outstanding
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

• Government Bonds and Corporate Bonds dominate the market, despite their volatility from year to year.
They occupy around 80% of the volume

• Financial debenture and Beneficiary certificate are the two main sector that keep growing for these 5 year.
Especially for Beneficiary certificate

31
Source :Chinabond 2007, NPV analysis
2008 05 21 – SRI in APAC Emerging Markets MATERIALE NPV – RIPRODUZIONE VIETATA
MACROECONOMICS ANLYSIS OF THE FINANCIAL SECTOR IN
CHINA

 Taiwan at a glance

 Financial market overview

 Banking sector

 Stock market

 Bond market

 Development issues

32

2008 05 21 – SRI in APAC Emerging Markets MATERIALE NPV – RIPRODUZIONE VIETATA


DEVELOPMENT ISSUES
- FUTURE PROSPECT
 Updating of financial regulations

-Drafted bills under review in the Legislative Yuan


 Efforts to create a secure and efficient financial environment
- Stronger credit risk control
- Implementation of the Basel Capital II Accord
- Outlook for Taiwanese banks (competitiveness)
- Securities firms to act as depository and manage client funds
- Integration of securities and futures self-regulatory organizations
- Continued development of the Taiwan ETF market
- Strengthening the solvency of insurance companies
- Amending the insurance product review system
- Continued review of the Taiwan Residential Earthquake Insurance system

- Financial institutions urged to implement a loan pricing policy


- Enhancing the preventive function of financial examinations

 Internationalization of the financial industry


- Pushing for internationalization of Taiwan's capital market
- Promoting corporate governance
- International cooperation
 Financial literacy initiatives
33
Source :FSC Annual Report 2007, NPV analysis
2008 05 21 – SRI in APAC Emerging Markets MATERIALE NPV – RIPRODUZIONE VIETATA

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