Taiwanese investors are reassessing their long-held preference for US-dollar assets, shifting their bets to Europe in the latest move by global investors away from the greenback.
Taiwanese funds holding European assets have seen an influx of investments recently, pushing their combined value to NT$13.7 billion (US$461 million) as of the end of last month, the highest since 2019, according to data compiled by Bloomberg.
Over the first half of this year, Taiwanese investors have also poured NT$14.1 billion into Europe-focused funds based overseas, bringing total assets up to NT$134.8 billion, according to data from the Securities Investment Trust and Consulting Association (SITCA), the largest six-month injection since 2021.
Photo: An Rong Xu, Bloomberg
At the same time, Taiwan-based funds focusing on the US saw their combined value fall by NT$538 billion over the first half of the year, the largest six-month decline since Bloomberg first started compiling the data in 2003. Taiwanese assets in US-focused overseas funds declined by NT$121.6 billion, the biggest contraction since SITCA records began in 2006.
The shift represents a pivotal moment for Taiwan’s wealthy institutional investors, which have until now overwhelmingly favored the US when allocating money overseas. Taiwan is the 11th largest foreign holder of US Treasuries. The country’s investors held US$292.9 billion in US government bonds as of the end of May, according to the US Department of the Treasury’s data.
That is US$5.9 billion less than in April, the biggest monthly decrease since September 2022.
The change is not limited to Taiwan. US President Donald Trump’s tariff barrage, the growing budget deficit and widening political polarization have prompted Asia’s major exporting economies to seek alternatives for the combined US$7.5 trillion they have invested in US equities and debt.
“Institutional investors such as the banks and life insurers are moving their assets very quickly,” said Agnes Lin (林雅慧), markets strategist at JPMorgan Asset Management, which manages Taiwan’s largest Europe-focused fund. “It’s clear they have a strategy to diversify their allocations over the long term.”
Lin expects Taiwan’s retail investors to start focusing on the region as well if European shares extend their gains until next year.
More than 90 percent of the NT$22 trillion that Taiwan’s life insurance companies have invested overseas is in US dollars, Financial Supervisory Commission data showed.
This concentration in US dollar-denominated assets presents a huge foreign exchange risk for these companies. The New Taiwan dollar’s historic surge against the greenback in early May caused combined foreign-exchange losses of more than NT$145 billion for local insurers.
Retail investors in US bond-focused exchange-traded funds were also affected by the currency’s dramatic appreciation, prompting renewed debate in Taiwan over the need for greater diversification.
The NT dollar has appreciated more than 10 percent versus the greenback so far this year, compared with a 0.9 percent depreciation versus the euro.
BNP Paribas Wealth Management for Asia-Pacific chief executive officer Arnaud Tellier said Taiwan’s wealthy families were shaken by the volatility in the local currency.
“We see now they really look at diversifying outside of US-denominated assets,” he said in a statement. “We see lots of questions about other currencies starting with the euro.”
NEW IDENTITY: Known for its software, India has expanded into hardware, with its semiconductor industry growing from US$38bn in 2023 to US$45bn to US$50bn India on Saturday inaugurated its first semiconductor assembly and test facility, a milestone in the government’s push to reduce dependence on foreign chipmakers and stake a claim in a sector dominated by China. Indian Prime Minister Narendra Modi opened US firm Micron Technology Inc’s semiconductor assembly, test and packaging unit in his home state of Gujarat, hailing the “dawn of a new era” for India’s technology ambitions. “When young Indians look back in the future, they will see this decade as the turning point in our tech future,” Modi told the event, which was broadcast on his YouTube channel. The plant would convert
‘SEISMIC SHIFT’: The researcher forecast there would be about 1.1 billion mobile shipments this year, down from 1.26 billion the prior year and erasing years of gains The global smartphone market is expected to contract 12.9 percent this year due to the unprecedented memorychip shortage, marking “a crisis like no other,” researcher International Data Corp (IDC) said. The new forecast, a dramatic revision down from earlier estimates, gives the latest accounting of the ongoing memory crunch that is affecting every corner of the electronics industry. The demand for advanced memory to power artificial intelligence (AI) tasks has drained global supply until well into next year and jeopardizes the business model of many smartphone makers. IDC forecast about 1.1 billion mobile shipments this year, down from 1.26 billion the prior
People stand in a Pokemon store in Tokyo on Thursday. One of the world highest-grossing franchises is celebrated its 30th anniversary yesterday.
Zimbabwe’s ban on raw lithium exports is forcing Chinese miners to rethink their strategy, speeding up plans to process the metal locally instead of shipping it to China’s vast rechargeable battery industry. The country is Africa’s largest lithium producer and has one of the world’s largest reserves, according to the US Geological Survey (USGS). Zimbabwe already banned the export of lithium ore in 2022 and last year announced it would halt exports of lithium concentrates from January next year. However, on Wednesday it imposed the ban with immediate effect, leaving unclear what the lithium mining sector would do in the
RSS