Wed, May 15, 2019 - Page 12 News List

Financial services firms face trade spat risk

By Kao Shih-ching  /  Staff reporter

The nation’s financial services firms are facing rising risk associated with the escalating US-China trade dispute, as they have a combined exposure of more than NT$10 trillion (US$321.25 billion) to the two nations, the Financial Supervisory Commission said yesterday.

The financial services sector had NT$8.09 trillion of exposure to the US as of the end of March, including insurers’ NT$6.5 trillion, banks’ NT$1.48 trillion and securities investment firms’ NT$124 billion, the commission said.

The sector’s exposure to China was NT$2.02 trillion as of the end of March, led by banks’ NT$1.75 trillion, insurers’ NT$262.2 billion and securities investment firms’ NT$13.5 billion, the commission added.

While the sector’s combined exposures to the two nations had fallen from NT$12.01 trillion a year earlier, the companies should still closely watch the development of the trade dispute and find ways to mitigate risks, the commission said.

The state-owned National Stabilization Fund (國安基金) would not intervene in the stock market, despite growing global volatility caused by rising trade tensions, Deputy Minister of Finance Frank Juan (阮清華) said.

Juan, who is also the executive secretary of the stabilization fund, told the Central News Agency that compared with markets in the US and Europe, Taiwanese markets remain resilient and there is no reason yet for the fund to consider intervention.

Although the fund did not intervene in local markets yesterday, analysts said government-led funds, such as the pension fund and labor insurance fund, did step in to prop up shares and bolster market confidence, helping shares recover after a tough opening period.

The TAIEX opened down 0.74 percent and dived to 10,363.02 points after five minutes of trading, but gradually recovered, closing 0.37 percent down on 10,519.25 points.

Foreign institutional investors sold a net NT$9.33 billion of local shares, while securities investment companies sold a net NT$575 million, Taiwan Stock Exchange data showed.

So far this week, the TAIEX has fallen 3.47 percent, better than declines of 5.35 percent in Japan, 5.13 percent in South Korea and 3.79 percent in Hong Kong, Securities and Futures Bureau Deputy Director Sam Chang (張振山) said.

Share prices would eventually react to economic fundamentals once investors calm down, Chang said, adding that local companies’ fundamentals are still strong and listed firms’ combined revenue rose 1.56 percent year-on-year in the first four months of the year.

Additional reporting by CNA

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