Exposure to China among Taiwan’s banking, insurance and securities firms and mutual funds in May fell about 17 percent from a year earlier, the Financial Supervisory Commission (FSC) said, attributing the result to a slower Chinese economy.
Exposure to China among local investment trust companies and foreign firms with local investors totaled NT$1.49 trillion (US$47.56 billion) at the end of May, down more than NT$300 billion from a year earlier, FSC data showed.
The banking industry’s exposure, or loans and investments, fell by NT$180.7 billion from a year earlier to about NT$1.05 trillion at the end of May, or about 25.2 percent of the industry’s net worth, a new low since figures began being published in the third quarter of 2013, the data showed.
Photo: EPE/EFE
The Banking Bureau said that the Chinese economy is facing downside risks amid trade tensions between Washington and Beijing, turning many investors away.
Caution among investors has risen about risks affecting Chinese enterprises and its property market, the bureau said.
Bank of Taiwan (臺灣銀行) chairman Lu Ju-cheng (呂桔誠) said that the decline in banks’ exposure was because China remains in conflict with the West, so Taiwanese enterprises have tended to globalize, moving investments from China to Southeast Asian countries or India, or return to Taiwan to diversify their risk.
Taiwanese banks followed the lead of their clients to seek a better balance, Lu said.
The local banking industry is determined to support Taiwanese enterprises as they adopt global expansion strategies, he said.
The FSC data showed that investments by local life insurance companies in Chinese equities fell NT$74.4 billion from a year earlier, or 43 percent, to NT$99.7 billion, which is only 0.32 percent of their capital, down from 0.59 percent.
The Insurance Bureau said that China’s trade dispute with the US and the effects of restrictions during the COVID-19 pandemic were behind the cuts by insurance firms.
Non-life insurers had cut their investments in Chinese equities to zero as of the end of May, as they needed funds to pay COVID-19 insurance policy claims in Taiwan, the FSC said.
However, local securities business increased investments in China by NT$4.66 billion, or 62.59 percent, from a year earlier to NT$12.1 billion in May, the data showed.
A Taiwanese brokerage increased its stake in a Chinese company by NT$657 million as the firm launched an intellectual rights suit, while proprietary operations of local securities firms made net investments of about NT$40 billion, the FSC said.
Investments by Taiwanese futures and trust firms were unchanged from a year earlier at NT$251 million and NT$2.69 billion respectively, it said.
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