The local financial sector’s exposure to China as of the end of September fell by more than NT$300 billion (US$9.63 billion) from a year earlier amid uncertainty over China’s economic outlook, according to the Financial Supervisory Commission (FSC).
The aggregate exposure of Taiwan’s banking, securities and insurance industries fell NT$339 billion from a year earlier to about NT$1.35 trillion at the end of the third quarter, data compiled by the FSC, the top financial regulator.
The latest exposure figure was also down from NT$1.84 trillion as of the end of May, when the amount dropped NT$544.7 billion from a year earlier.
The FSC said China’s zero tolerance COVID-19 policy and massive defaults in its presale property market have hurt its economy, and trade tensions between Washington and Beijing and rising interest rates globally have also added uncertainty to the China economy.
In the first nine months of 2022, China’s gross domestic product rose 3 percent from a year earlier, which is well below the official target of 5.3 percent.
The situation has led to concerns among Taiwanese financial institutions, leading them to trim their exposure to China, the FSC said.
The exposure of Taiwan’s banking sector to China, including loans to enterprises, investments and interbank loans, fell by NT$234 billion from a year earlier to about NT$1.19 trillion as of the end of September, accounting for 28.86 percent of the sector’s net worth.
That ratio was the lowest since the FSC started tallying the figures since the third quarter of 2013. The ratio also fell from 30.2 percent as of the end of May, the FSC data showed.
Taiwanese banks’ lending to enterprises in China as of the end of September fell NT$49 billion from a year earlier, investments dropped NT$143.9 billion year-on-year, and interbank loans moved lower by NT$41.1 billion.
As for the insurance industry, its exposure to China fell by NT$103.66 trillion from a year earlier to NT$149.06 billion, consisting of NT$148.5 billion from life insurance companies and NT$560 million from property insurers as of the end of September, the FSC said.
The exposure of the local securities industry stood at NT$12.96 billion as of the end of September, down NT$1.42 billion from a year earlier, the FSC said.
Commenting on the fall in exposure of Taiwanese securities houses, Chang Tzu-min (張子敏), deputy director of the FSC’s Securities and Futures Bureau, said previous investments by local securities houses in China had come amid Beijing’s loose monetary policy.
They have since cut back their investments in China, however, having taken account of the limited room for China to cut interest rates, which would squeeze investors’ profits in the market.
Source: Focus Taiwan News Channel