Financial holding firms cut exposure to U.S. in Q3

Taipei, Nov. 9 (CNA) Financial holding companies in Taiwan reduced their exposure to the United States by more than NT$165 billion (US$5.12 billion) in the third quarter from a quarter earlier, but the U.S. remained the sector's largest debtor.

Financial holding companies in Taiwan had NT$9.67 trillion in exposure to the U.S. market as of the end of September, down about NT$165.8 billion from June, according to the Financial Supervisory Commission (FSC), Taiwan's top financial regulator.

It was the steepest decline in exposure among any foreign debtor.

Analysts said the fall largely reflected caution toward the American market amid uncertainties ahead of the Nov. 5 U.S. presidential vote, which resulted in voters electing Republican candidate Donald Trump to head the country.

The exposure to foreign countries by Taiwan's financial holding companies mainly covers investments made in those economies as well as commercial and interbank loans made to those economies, according to the FSC.

At the end of September, investments made by financial holding company bank and life insurance units in the U.S. had fallen by about NT$237.5 billion from a quarter earlier to NT$8.71 trillion because of scaled back investments in the U.S. bond and equity markets.

That was somewhat offset, the FSC said, by the NT$49.05 billion in gains on investments in the U.S. during the quarter due to a spike in bond prices after the Federal Reserve started to cut interest rates in September.

As of the end of the third quarter, the overall exposure internationally (international outstanding claims) of Taiwan's financial holding companies was down NT$196.31 billion from a quarter earlier to NT$27.83 trillion.

The sector's exposure to the domestic market bucked the international downturn, however, rising 1.54 percent from a quarter earlier to NT$45.34 trillion, FSC data showed.

The U.S. accounted for 34.76 percent of the total exposure of the financial holding sector to foreign markets as of the end of September to remain the largest debtor.

China came in second, accounting for 7.9 percent of the total at NT$2.2 trillion. The sector's exposure to China also fell during the quarter from a quarter earlier, by NT$20.83 billion.

France replaced the United Kingdom to become the third largest debtor to Taiwan's financial holding sector with exposure of NT$1.29 trillion as of the end of September, while exposure to the U.K. totaled NT$1.27 trillion, the FSC said.

Australia was the fifth largest debtor, with Taiwan financial holding company exposure of NT$1.25 trillion as of the end of September, followed by South Korea (NT$1.15 trillion), Japan (NT$1.04 trillion), Hong Kong (NT$1.01 trillion), Canada (NT$884 billion) and the United Arab Emirates (NT$593 billion), the data showed.

Japan overtook Hong Kong to become the seventh largest debtor to Taiwan's financial holding sector at the end of the third quarter, with the figure topping the NT$1 trillion mark for the first time, the data showed.

Among the top 10 debtors, only Japan, Australia and South Korea registered quarterly increases in claims by Taiwanese financial firms during the quarter, according to the FSC.