TAIPEI (Taiwan News) — Foreign investors are reportedly concerned about investing in Taiwan amid rising geopolitical tensions.
According to a Reuters report, investors fear that if China starts a war with Taiwan, it could cause the end of Taiwan as a market. Due to concerns over tariffs and the economy, foreign investors pulled approximately NT$330.55 billion (US$11 billion) from Taiwan stocks this year.
Singapore-based Aravali Asset Management CIO Mukesh Dave said the risk of an attack is hard to hedge. "You can't settle any trades, the currency might disappear altogether. You either carry on like it's business as usual, or stay away,” he said.
He highlighted TSMC as the rationale for investing in Taiwan. Because of the chip giant’s power, the expectation, or hope, among investors is that the US will defend Taiwan, Dave said.
However, US President Donald Trump has raised worries about whether the US would come to Taiwan’s aid in the event of a Chinese attack. Goldman Sachs' Cross-Strait Risk Index has reportedly increased since Trump took office, the report said.
The report also mentioned that on the betting platform Polymarket, the odds of China invading Taiwan rose from almost zero to 12% this year. Mercer’s global chief investment strategist, Rich Nuzum, said investors are finding ways to diversify amid the risks.
According to Balfour Capital Group CIO Steve Lawrence, "If aggression toward Taiwan occurs, the investment decision becomes binary: stay exposed and absorb extreme volatility, or exit swiftly to preserve capital.”
However, Uni-President's head of the securities investment advisory unit in Taiwan, Li Fang-kuo, said he thinks investors are misinterpreting the level of risk. He said the issue lies in tariffs, and investors should not interpret it from a geopolitical risk perspective.
