Investments by listed Taiwan companies in China fall in January-March

Taiwan, June 10 (CNA) China-bound investments made by Taiwanese companies listed on the main board and the over-the-counter (OTC) market moved lower at the end of the first quarter of this year from the end of 2022 at a time of weaker-than-expected economic recovery in China, according to the Financial Supervisory Commission (FSC).

Data compiled by the FSC, the top financial regulator in Taiwan, showed that investments made by listed Taiwanese firms fell NT$19 billion (US$618 million) from the end of last year to NT$2.68 trillion at the end of March, the steepest decline for the first quarter in six years.

The first quarter decline also reversed a NT$174.4 billion year-on-year increase in China-bound investments by Taiwanese listed companies in 2022, the FSC data indicated.

At the end of the first quarter, the number of listed local firms investing in China also fell by nine from the end of 2022 to 1,201, which accounts for about 71.4 percent of the 1,682 companies listed on the main board and the OTC market, according to the FSC.

At the same time, Taiwanese listed companies remitted NT$15.6 billion worth of investment returns from China in the first quarter, marking the highest in investment return remittances to Taiwan for the first quarter in seven years, the FSC data showed.

The fall in China-bound investments and rise in investment return remittances back to Taiwan in the first quarter have sparked worries among listed companies as the Chinese economy has made a slower-than- expected recovery in the post COVID-19 era.

Kao Ching-ping (高晶萍), deputy director of the FSC's Securities and Futures Bureau, declined to comment but said listed companies have their own investment considerations and planning.

However, the FSC said the decline in China-bound investments partly reflected a weaker Chinese yuan against the greenback, which led to a fall in investment value as assets were converted into U.S. dollar terms from the yuan.

The decline in the number of Taiwanese listed firms investing in China is partly because some companies either disposed of or liquidated their Chinese subsidiaries. In addition, some other Taiwanese investors scaled back the capital of their Chinese units, Kao added.

Due to falling global demand, plastics and electronics component firms felt the pinch resulting from inventory adjustments and a spike in more expensive raw materials. As a result, the 1,201 listed companies saw their profit fall NT$21.5 billion from a year earlier to NT$72.3 billion in the first quarter, the FSC said.

As of the end of March, the aggregate remittances of returns from China-bound investments made by Taiwanese listed companies back to Taiwan hit NT$719.6 billion, the FSC added.

About 1,290 Taiwanese listed companies made overseas investments as of the end of March, accounting for 76.69 percent of the total number of listed firms, it said.

As of the end of March, the accumulated outbound investments by these listed companies hit NT$7.85 trillion, down NT$3.8 billion from a quarter earlier.

In the first quarter, listed companies raked in NT$117.2 billion in profit from their overseas investments, a significant drop of NT$178.7 billion from a year earlier, according to the FSC.

Commenting on the shrinking profit, Kao said the bottom line in the shipping industry was affected by a drop in freight rates amid rising inflation and falling demand, while the electronic components and plastics industries also saw their profits hit by weakening global demand, inventory adjustments and growing raw material prices.