Taiwan regulator strengthens market defences

TAIPEI: Taiwan’s top financial regulator is moving to strengthen the market’s defences in the face of outflows set to reach the highest level in two decades.

“We are at a period of transition, and I believe foreign investors will return to Taiwan’s markets eventually,” Huang Tien-mu, chairperson of the Financial Supervisory Commission, said in an interview Wednesday.

At the same time, DBS Group Holdings Ltd is expected to make big investments after completing its deal to buy Citigroup Inc’s consumer banking assets in Taiwan, he said.

Increased tensions over Taiwan, including tighter US control over chip exports to China, have dimmed the trade-reliant island’s economic outlook.

The turbulence has led global financial firms to reassess the risks of doing business in Greater China and global funds to pull money out at the fastest pace in two decades.

For Huang, factors impacting foreign investment outflows include Federal Reserve interest rate hikes, inflation concerns and supply chain issues.

“They are all related to changes in the international political and economic situation,” he said.

More global financial institutions are likely to come to Taiwan after some joined this year, he said, without naming any of the companies that have expressed interest in Taiwan.

“DBS will become Taiwan’s largest foreign bank in retail banking after completing the deal with Citigroup, and it’s expected to make lots of investments for equipment and talent to retain local customers,” said Huang.

Even so, the turmoil is impacting decision making at banks. UBS Group AG, for example, has asked its Taiwan-based trading desk to assess its contingency planning and see how they can lower exposure to the island.

Insurers are also backing away from writing new policies to cover firms investing in China and Taiwan.

Chuang Hsou-yuan, director-general of FSC’s banking bureau, said: “As far as we know no foreign banks have plans to leave or downsize locally.”

The benchmark Taiex Index has fallen about 30% from a record high in January, among the world’s worst-performing stock markets this year. — Bloomberg