United States Continues to Lead as Major Creditor to Taiwan's Financial Conglomerates
Taiwan's Financial Holding Firms See Sharpest Quarterly Decline in International Exposure
Taiwan's financial holding firms have experienced the steepest quarterly decline in international exposure since 2015, primarily due to U.S. tariff policies and a stronger Taiwan dollar against the U.S. dollar.
The total international exposure by these firms fell to NT$27.02 trillion by the end of June, marking a drop of NT$2.09 trillion (7.2%). This decline was most notable in the exposure to the U.S., the largest debtor to these firms, which fell below the NT$10 trillion mark with a reduction of NT$792.3 billion in one quarter.
The exposure to China, the second-largest debtor, also decreased, contributing to the overall decline in international exposure. This reduction was observed in interbank loans, lending, and investments, amounting to a decrease of NT$149.9 billion from the previous quarter.
The data, released by the Financial Supervisory Commission (FSC), showed that the US was the largest debtor to Taiwan's financial holding firms in the second quarter, with exposure amounting to NT$9.56 trillion. China ranked second, with exposure falling to NT$1.896 trillion.
Japan was the only country among the top 10 debtors with a quarterly increase in exposure to Taiwanese financial holding firms, rising NT$12.31 billion. South Korea ranked seventh in exposure at NT$1.07 trillion, followed by Hong Kong at NT$925.6 billion. Australia ranks fourth in exposure at NT$1.19 trillion, followed by Japan at NT$1.13 trillion. France ranked third in exposure at NT$1.28 trillion, followed by the UK at NT$1.27 trillion. Canada ranks ninth in exposure at NT$867.4 billion, followed by the United Arab Emirates at NT$561.9 billion.
The decline in exposure was attributed to the impact of U.S. tariff policies discouraging exposure to U.S. markets, the appreciation of the Taiwan dollar against the U.S. dollar reducing the USD value of foreign assets, and a reduced credit, lending, and investment exposure to both U.S. and China amid an uncertain global trade environment.
A strategic shift towards increasing domestic exposure by NT$1.12 trillion, focusing more on local markets as a safer alternative, was also observed.
The data was released by the Financial Supervisory Commission (FSC) on Sunday.
- Despite the decline in international exposure, Taiwan's financial holding firms continued to invest in other countries, with Japan being the only top 10 debtor showing a quarterly increase in exposure.
- The sharpest quarterly decline in international exposure was primarily due to the impact of U.S. tariff policies, the appreciating Taiwan dollar against the U.S. dollar, and a reduced credit, lending, and investment exposure to both U.S. and China markets, leading to a strategic shift towards increasing domestic business.
