TAIPEI: Taiwan, the world's fifth-best-performing stock market this year, still faces several obstacles before it can be categorized as a developed market among benchmark indexes, the FTSE Group said.

"It will require a lot of work to turn into a developed market by August," when FTSE's next review takes place, Paul Hoff, managing director for Asia Pacific, said in a telephone interview yesterday in Taipei. "It's only been a few months since the last review."

The improvements sought by FTSE include free availability of local currency, and changes to rules on stock borrowing and lending, Hoff said. The outcome of the next review will be announced in September.

The London-based index compiler currently ranks Taiwan as an "advanced emerging" market. A higher ranking would help attract more of the $3.5 trillion in investments that are benchmarked against FTSE's indexes.

"FTSE gave us feedback by investors," Michael Lin, senior vice president at the Taiwan Stock Exchange, said by telephone in Taipei yesterday. "We will strive to make the improvements for investors; that's more important to us, compared with a status upgrade."

Rival index compiler MSCI Inc in June said it will consider including Taiwan among developed markets.

Taiwan's TAIEX Index has risen 48 percent this year, fifth-most among 88 indexes tracked globally by Bloomberg, on speculation warmer ties with the mainland will lead to increased investment.

Relations have improved since Taiwan leader Ma Ying-jeou took office on May 20 last year. The two sides ended a 60-year ban on direct shipping, air and postal links on Dec 15.

Taiwan and the mainland are poised to sign agreements allowing investments in each other's banking, insurance and securities industries, after agreeing on a broad framework for cooperation on April 26 at the third round of cross-Straits talks.

Bloomberg News

(HK Edition 07/10/2009 page2)