China's government-fuelled, faster economic growth and lower costs are draining money from Taiwan. Foreign direct investment in Taiwan fell 22 percent in the first half from a year earlier, while Taiwanese investors spent 23 percent more on projects in China.
A 16 percent slump in Taiwan's key stock market last quarter put an added drain on the economy, damping consumer spending and corporate investment. Banks saddled with a rising number of bad loans were reluctant to lend.
"The equity market is a proxy for domestic confidence," said Paul Alapat, an economist at Nomura International [Hong Kong] Ltd. "The financial sector has only been highlighted, not resolved."
RSS