China-bound investments by Taiwanese companies listed on the local stock exchange’s main board and the over-the-counter market fell in the first quarter of this year, the Financial Supervisory Commission (FSC) said last week.
Investments made by listed Taiwanese firms fell NT$19 billion (US$618.39 million) quarterly to NT$2.68 trillion, the steepest decline for the three-month period in six years, the commission said on Monday last week.
The number of listed firms investing in China dropped by nine to 1,201, which accounts for about 71.4 percent of the 1,682 listed companies, the commission said.
Photo: AFP
Taiwanese listed companies remitted NT$15.6 billion of investment returns from China over the period, the highest quarterly figure in seven years, commission data showed.
The decline in China-bound investment and the rise in remittances sparked worries among listed companies, as the Chinese economy’s recovery in the post COVID-19 pandemic era has been slower than expected.
Securities and Futures Bureau Deputy Director Kao Ching-ping (高晶萍) declined to comment, only saying that listed companies have their own investment considerations and plans.
The commission said the fall in China-bound investments partly reflected a weaker Chinese currency against the greenback, which led to a fall in investment value after assets were converted from the yuan to the US dollar.
The decline was also caused by some companies selling or liquidating their Chinese subsidiaries, it said, adding that some Taiwanese investors scaled back the capital of their Chinese units.
Due to falling global demand, plastics and electronics component firms felt the pinch of inventory adjustments and a spike in raw material costs.
As a result, listed companies saw cumulative profit fall NT$21.5 billion from a year earlier to NT$72.3 billion in the first quarter, the commission said.
As of the end of March, Taiwanese firms investing in China had remitted NT$719.6 billion as investment returns, it said.
About 1,290 listed companies made overseas investments in the first quarter, accounting for 76.69 percent of the total number of listed firms, the commission said.
As of the end of March, the accumulated outbound investments by listed companies reached NT$7.85 trillion, down NT$3.8 billion from a quarter earlier.
In the first quarter, listed companies generated a total profit of NT$117.2 from their overseas investments, falling from NT$178.7 billion a year earlier, the commission said.
The shipping industry’s bottom line was affected by a drop in freight rates amid rising inflation and falling demand, Kao said.
Profits in the electronic components and plastics industries were hit by weak global demand, inventory adjustments and rising raw material prices, Kao added.
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