Taiwanese insurers, banks cut back on China exposure

Taiwan’s life insurers and banks have reached a record-low exposure to China, according to the Financial Supervisory Commission (FSC).

The FSC attributed the decline to the COVID-19 pandemic, economic uncertainty and a weakening property market making financial firms more conservative about investing in China, the Taipei Times reported.

In the third quarter of 2022, life insurers reduced their investment in China for the sixth consecutive quarter, with combined investments at NT$148.5 billion (SG$6.56 billion) – the lowest in 25 quarters, the FSC said.

While Cathay Life Insurance had the highest investment in China among its peers at NT$32 billion, its investments have been decreasing for six consecutive quarters. Other members of the top five are Taiwan Life Insurance, Fubon Life Insurance, China Life Insurance, and Nan Shan Life Insurance.

For banks, their aggregate exposure to China through loans, investments and deposits contracted by around 17% year on year to NT$1.18 trillion, the lowest level in nine years.

Taiwanese banks’ exposure to China accounted for 29% of their combined net value of NT$4.11 trillion, down from 36% from last year, the FSC said.

Despite the lower exposure to the Chinese market, Taiwanese banks and insurers have invested more in tech giants Tencent and Alibaba, with exposure growing by 4.3% and 3.5%, respectively.