Foreign investors undeterred by China tensions, says stock exchange chairman

Quanta Computer

18/08/2023 05:00

By Faith Hung and Roger Tung
       TAIPEI, Aug 18 (Reuters) - Foreign investors seem to be
undeterred by the possibility that growing tensions between
Taiwan and China could precipitate fund outflows from the Taiwan
market, the chairman of the Taiwan Stock Exchange told Reuters.
    Up until the end of June, investors were going all in on
Taiwan stocks with net foreign buying over the previous six
months totalling $12 billion, a high water mark not reached
since the first half of 2008. And Taiwan's benchmark index
 .TWII  performance is up 16% in U.S. dollar terms this year,
among the best benchmark performances in Asia. 
    But the net buying rally quickly changed course over these
past two months, shifting to a net selling of T$83.9 billion
($2.62 billion) for July and T$106.6 billion so far in August.  
    Taiwan Stock Exchange Chairman Sherman Lin said in an
interview this was a natural plateau after a rally rather than a
sign that foreign funds are fleeing the market.  
    "Foreign investors have recently trimmed their holdings. But
they still hold around 40% of Taiwan shares and they have been
able to maintain that level for quite some time up to now," he
said on Thursday. 
    "We have talked to foreign investors, including from
countries such as Japan and Singapore. For them, the tensions
barely register as a concern," he said, citing Taiwan's regional
neighbours who would be most sensitive to the repercussions of
any conflict between Taiwan and China.  
    China, which claims Taiwan as its own territory despite the
strong objections of the island's democratically elected
government, staged war games around Taiwan last August, and
repeated those drills in April of this year. 
    "Even with the regular sight of Chinese warplanes flying
around, why have foreign investors not left the Taiwan market?"
Lin said.  
    Investment in Taiwan is currently too attractive to be
deterred by China, he added.  
    Foreign investors are attracted to Taiwan's highly developed
supply chain, led by the world's top chipmaker TSMC  2330.TW 
 TSM.N , a supply chain that plays an essential role in the
currently booming AI industry, Lin said.
    "Taiwan's supply chain is very strong. All these companies
(in the supply chain), including Foxconn  2317.TW  and Quanta
Computer  2382.TW , have the capability to make quick
adjustments in the face of geopolitical risks." 
    Next month, Lin and the island's chief securities regulator
will lead a delegation to New York and Boston, seeking to
establish direct links with 16 financial institutions, including
the Depository Trust & Clearing Company，stock exchanges, pension
funds, and fund management firms, in efforts to draw more
investment in Taiwan stocks, he said. 
    "The more connected Taiwan is with international capital,
the more secure Taiwan will be." 

 (Reporting by Faith Hung and Roger Tung; Editing by Jacqueline
Wong)
 ((faith.hung@thomsonreuters.com;))