ING set to launch Taiwan mutual fund in South Korea

By Faith Hung

TAIPEI (Reuters) - Dutch financial services group ING Groep <ING.AS> will launch next week South Korea's first mutual fund investing solely in Taiwan stocks on hopes that ties between China and Taiwan will improve and that the technology cycle is bottoming out, an executive said.

"We expect Mr. Ma can improve Taiwan's relationship with China," Yun Sik Chung, chief investment officer of ING Investment Management Korea, told Reuters on Thursday, referring to Taiwan's incoming President Ma Ying-jeou.

"(The) IT industry is bottoming out. We think this is the right time to enter the Taiwan market," he said on the sidelines of a company event.

Taiwan's broader market <.TWII> is Asia's best performing market over the last three months with a 16 percent rally, followed by the South Korean market's <.KS11> 11 percent gain.

Many investors believe Taiwan's economy will pick up under the new president, who favors closer business ties with China, such as direct links and more mainland tourists.

On Thursday, the index rose 1.54 percent to a six-month closing high before Ma's inauguration next Tuesday.

Taiwan's technology firms, many of which make products for U.S. customers, including Apple Inc <AAPL.O> and Hewlett Packard <HPQ.N>, are becoming more attractive as fears about the U.S. subprime meltdown ease, said the chief investment officer.

"There were worries about the U.S. credit crunch. But after a quarter or two, those worries are diminishing," he said, adding that the new fund aims to buy shares of Taiwan's semiconductor, flat panel and mobile phone makers.

"I think the overall Taiwan market can kick in an average of at least 15-20 percent of upside per year over the next two to three years," Chung said.

($1=T$30.9) (Editing by Anne Marie Roantree and Jonathan Hopfner)