Taiwan’s financial services firms cut their exposure to China by 20% to a record low

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Taiwan’s financial institutions have reduced their exposure to China to a record low amid economic and political uncertainties, according to the top financial regulator.

According to the Taiwanese Financial Supervisory Commission, total exposure to China among Taiwanese banks, insurers and securities firms is down 20% year-on-year to about NT$1.35 trillion ($43.3 billion) at the end of September.

The government of Taiwan has long urged its companies to diversify away from the world’s second-largest economy. In October, the island’s finance minister told Bloomberg News that the economy, which relies on exports, will not “put all our eggs in one basket” and needs to work more closely with other trading partners.

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According to the FSC, insurers cut more than 40% of their investments in China to manage risk. Part of the adjustments was due to the fall in valuations, according to the FSC. The Chinese benchmark Shanghai Composite Index is down 15% this year.

Meanwhile, Taiwanese banks’ exposure to China fell 16.5% to NT$1186.9 billion.

“Banks are more conservative about China’s economic outlook,” Sherri Chuang, director general of the FSC’s Banking Bureau, said in a telephone interview, adding that the move also reflects clients’ shifting investment strategies.

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Photo: A pedestrian passes the Taipei 101 building in Taipei, Taiwan, on Tuesday, May 24, 2022. Photo credit: Lam Yik Fei/Bloomberg

Copyright 2022 Bloomberg.

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