Singapore’s UOBAM Set to Enter Taiwan Active ETF Market

UOBAM’s Entry into Taiwan’s Active ETF Sector

Singapore’s UOB Asset Management (UOBAM) has confirmed its intention to enter Taiwan’s active exchange-traded fund (ETF) market. This move comes after Taiwan’s regulatory authorities announced earlier this year that they would accept applications for active ETFs. Thio Boon Kiat, UOBAM’s group chief executive, stated that the firm is preparing to launch an active ETF in Taiwan in 2024.

Taiwan opened its market for active ETF applications in January as part of its strategy to diversify the country’s thriving ETF sector, which has historically been dominated by passive bond products. Several firms, including Japanese asset management giant Nomura, are set to enter the market, with Nomura planning to launch Taiwan’s first active ETF in May. Other notable players such as US-based AllianceBernstein and Taiwanese firm KGI Securities Investment Trust have also applied for approval to launch active ETFs. Looking ahead to 2025, Fubon Asset Management and Cathay Securities Investment Trust are set to introduce at least four new active ETFs.

UOBAM’s Market Strategy and Outlook

Foreign asset managers see Taiwan as an opportunity to introduce global investment strategies through active ETFs, potentially giving them an edge over domestic firms. However, Thio remains cautious about Taiwanese investor interest in global assets. He emphasized that while global managers have expertise, local market needs should be prioritized. In 2023, Taiwan’s financial markets experienced significant growth, with local investors maintaining strong confidence in domestic investments. As a result, there was little demand for global asset allocation.

Taiwan’s ETF sector has seen impressive growth, with total assets surging by 55% last year to reach $195.99 billion. These ETFs now account for 66.1% of all onshore public fund assets. UOBAM is currently one of only three offshore asset managers with ETFs listed in Taiwan, alongside Nomura Asset Management and Franklin Templeton, which operates through a local joint venture.

Expansion into the Singapore-China ETF Cross-Listing Scheme

In addition to its Taiwan plans, UOBAM is looking to expand its presence in China through the stalled Singapore-China ETF cross-listing scheme. The firm is currently in discussions with its Chinese joint venture partner, Ping An Fund Management, to cross-list a China-focused ETF on the Singapore Exchange later this year. This move would mark UOBAM’s second ETF under the initiative, following its initial launch in November 2022.

Since the Singapore-China master-feeder scheme was introduced in late 2021, only eight ETFs have been launched under the program. The most recent ETF under this scheme was introduced in December 2023 by China Merchants Fund Management in collaboration with Lion Global Investors. However, shifting investor sentiment towards China and uncertainty surrounding US markets may drive renewed interest in the program.

Conclusion

UOBAM’s upcoming entry into Taiwan’s active ETF market reflects its strategic focus on expanding in Asia’s growing ETF sector. With Taiwan opening its doors to active ETFs and the potential resurgence of the Singapore-China cross-listing scheme, UOBAM is positioning itself to capitalize on emerging investment trends in the region.

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