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Exposure of Taiwan's financial firms, mutual funds to China down 17%
 

07/08/2023 03:15 PMListen

Taipei, July 8 (CNA) Exposure of Taiwan's banking, insurance and securities firms and mutual funds to China as of the end of May fell about 17 percent from a year earlier, according to the Financial Supervisory Commission (FSC), which cited a slower Chinese economy.

Data compiled by the FSC, the top financial regulator in Taiwan, showed exposure of the three financial industries and mutual funds set by local investment trust companies and foreign counterparts with local investors participation totaled NT$1.49 trillion (US$47.56 billion) at the end of May, down more than NT$300 billion or about 17 percent from a year earlier.

As for the banking industry, its exposure to China, referring to loans and investments, fell NT$180.7 billion from a year earlier to about NT$1.05 trillion at the end of May, which accounted for 25.2 percent of the industry's net worth, a new low since the tally started in the third quarter of 2013, the data indicated.

The FSC's Banking Bureau said China's economy was now faced with downside risks and trade tensions between Washington and China continued, which have turned many investors away.

In addition, investors also turned more cautious about growing risks among local-level Chinese enterprises, while caution continued toward the Chinese property market, the bureau said.

Commenting on the decline of banks' exposure to China, Lu Ju-cheng (呂桔誠), Chairman of Bank of Taiwan, the largest lender in the country, said since China remained bothered by a conflict with the west, Taiwanese enterprise tended to go globalized and relocate their investments from China back to Taiwan or to Southeast Asian countries or India to diversify risks.

Lu said it was understood that Taiwan's banking industry lowered their exposure to China, following the footsteps of their clients, to seek a new balance.

He said the local banking industry was determined to provide support to Taiwanese enterprises when they adopted global expansion strategies.

According to the FSC, investments made by local life insurance companies in Chinese equities even fell more significantly by 43 percent or NT$74.4 billion, from a year earlier, to NT$99.7 billion as of the end of May. The latest exposure made up only 0.32 percent of their own capital, down from 0.59 percent from a year earlier, the FSC said.

The FSC's Insurance Bureau also cited the impact resulting from the conflicts between Washington and Beijing and the COVID-19 pandemic behind insurance companies' investment cuts in China.

The FSC data showed non-life insurance firms from Taiwan even cut their investments in Chinese equities to zero as of the end of May as they needed funds to pay compensation for COVID-19 insurance policies sold in Taiwan.

Bucking the downturn, the FSC's data showed that the local securities business raised their investments in China by NT$4.66 billion or 62.59 percent from a year earlier to NT$12.1 billion as of the end of May.

The increase came after a Taiwanese brokerage participated in a rights issue project launched by a Chinese company it had already owned a stake by investing NT$657 million, while the proprietary operations of the local securities industry also raised their investments in China by about NT$40 billion, betting the Peoples' Bank of China would continue to lower interest rates, the FSC said.

The FSC added that Taiwanese futures and investment trust firms left their investments in China unchanged from a year earlier to NT$251 million and NT$2.69 billion, respectively.

(By Hsieh Fang-yu and Frances Huang)

 

Source, https://focustaiwan.tw/business/202303080023

 

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