According to anonymous sources, the Taiwanese financial regulator has granted permission for Fuh Hwa Securities Investment Trust to set up the first yuan denominated mutual fund in the country.
The fund though still requires approval from island-country's central bank. With the denomination, Fuh Hwa would be able to raise 20 billion yuan or US$3.22 billion for its initial offer. The fund would be used to invest in Dim Sum bonds of Hong Kong though there is an option to invest in the 'Formosa bonds' of Taiwan.
In an unprecedented move, Mainland China and Taiwan have formalized an agreement last September for the creation of a clearing house for yuan denominated transactions on the island. This system has allowed both local and foreign banks to launch bond issues in the island.
Fuh Hwa was established back in June 1997 and has grown to become the biggest securities investment trusts in Taiwan.
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