Taiwan's financial sector exposure to US, China tops NT$10 trillion


(CNA photo)

Exposure of the local financial sector to the United States and China has surpassed the NT$10 trillion level, and the massive international claims on the top two economies have prompted the Financial Supervisory Commission (FSC) to more carefully watch the rising trade tension between the two countries.

The FSC said an escalation of a trade war between the U.S. and China could boost potential risk for the three financial industries.

The U.S. Trade Representative office released a list Monday of US$300 billion-worth of additional products imported from China on which 25 percent punitive tariffs could be imposed, as the two countries seemed content to exchange threats rather than find a solution.

On May 10, Washington raised tariffs on US$200 billion-worth of Chinese merchandise to 25 percent from 10 percent and Beijing retaliated with threats of tariffs of its own.

Data compiled by the FSC shows that exposure from the local banking industry to the U.S. stood at NT$1.48 trillion as of the end of the first quarter, exposure from the local securities industry reached NT$124.8 billion and exposure from the local insurance industry hit NT$6.43 trillion.

The combined exposure from the local financial sector to the U.S. totaled about NT$8.04 trillion as of end of March, the data shows.

Meanwhile, exposure from the local financial sector to China totaled NT$2.03 trillion as of the end of March, which was comprised of NT$1.75 trillion from the banking industry, NT$262.2 billion from the insurance industry and NT$13.54 billion from the securities industry, the FSC said.

Sources from the local financial sector said fears over the adverse impact on Taiwanese financial institutions' bottom lines have been running deeper if the U.S.-China trade war gets worse, sending ripples through the global equity and currency markets.