The long standing animosity between mainland China and Taiwan may be near an end, which will help boost both countries’ economies, stock markets and exchange traded funds (ETFs).

The long-awaited political breakthrough between Chinese and Taiwanese is showing signs that it’s near. Next month, regular flights between the two countries will begin, on a scheduled basis, reports Brendan Soble for Flight Global. This will give a financial boost to 11 carriers, in an effort that will not affect flights from Hong Kong, and Macau, which had carried the Taiwan-Chinese traffic. Six Chinese and five Taiwanese carriers have gotten the go-ahead for 36 weekly flights across the Taiwan Straight.

Meanwhile, Taiwan brokerage houses are going to be allowed to invest in Chinese  counterparts by the end of the year as part of a plan to boost trade with China. The incoming Taiwanese financial regulator, Gordon Chen, is also allowing banks to invest in mainland lenders through offshore subsidiaries.

The new administration with Ma Ying-jeou of China will allow for closer business ties between Taiwanese and mainlanders. Improved relations between Beijing are also promised. To allow for a smooth flow of investments, the FSC has plans to allow the island’s brokerages to invest up to 30% of their net assets in China, up from 10% before, according to Rachel Lee and Baker Li for Reuters.

Watch these ETFs to see if the improved relations help boost the economy:

• iShares FTSE/Xinhua China 25 Index (FXI), down 17.5% year-to-date
• SPDR S&P China (GXC), down 20.2% year-to-date
• iShares MSCI Taiwan Index (EWT), up 0.9% year-to-date

Tags | Asia, China, Emerging Markets, FXI, GXC, Taiwan