Comments: Mainland China Bond ETF in Taiwan from hot selling to withering on both side

Source: Bloomberg

Author: betty house

Four years ago, Taiwan had the size of the world's largest overseas Chinese bond index fund scale. Now this market is on the verge of zero, reflecting the deepening of financial and economic and trade on both sides of the strait.More layer of reasons.

At that time, for Taiwan's life insurance operators who grew at high -speed premium income at that time, index funds (ETFs), which issued and tracked bonds in mainland China locally, were a popular label pursuing high profit.However, according to the data compiled by Bloomberg, the total assets of China Debt ETF in Taiwan have exceeded 180 billion yuan from the peak at the end of 2019 (NT $, the same below, about 7.658 billion yuan).100 million yuan echo the situation of large -scale foreign capital withdrawal from Chinese stocks and bonds in recent years.

This withered market reflects under the environmental factors such as geopolitical tension, diversification of supply chain and the slowdown of China's economic slowdown. The economic and trade and financial links between Taiwan and mainland China are no longer close.Many analysts said that no matter what the results of the presidential election in Taiwan in January, this decourse will continue.

The following are several aspects that have been alienated from cross -strait economic and trade relations in recent years:

Financial Market

In 2018, Taiwan ’s Yuanda Investment Credit took the lead in launching ETFs that tracked the first local Treasury and policy financial bonds in Mainland China, attracting institutional investors to buy a swarm, and also tailor -made for life insurance operators at that time.Order the trend of connecting the ETF of overseas bonds.

This type of financial commodity provides another overseas investment channel for insurance companies.Different from the low interest rates in Taiwan, the yields of RMB valuation bonds at that time were considerable, and the endorsement of the Beijing government and policy banks made the market relatively assured of the credit of such bonds.

However, these Lido reversed one by one in the next few years. The key turning point is the investment restrictions from the Taiwan Financial Management Association at the end of 2019. It is required that the insurance company must not hold the BBB-evaluation below the Bond.Most of the golden debt is not rated by the International Corporation. This regulation is essentially prohibited from the Life Insurance operator's deployment of the bond ETF.Later, the Federal Reserve raised interest rates and the debt storm in mainland China accelerated in 2022 to make Taiwanese investors pipa.

China Debt ETF is difficult to reproduce the glory in Taiwan.Kiki Securities pointed out that under the condition of Taiwan's regulations, the ETF of Mainland China Bond ETF wants to focus on the market favor, especially the life insurance industry who attracts the majority of funds.Essence

Banking industry exposure

Taiwan's banking industry is also constantly reducing financial footprints in mainland China.According to data from the Taiwan Monetary Council, Taiwan's banking industry's risk exposure in mainland China has set a record low for 10 consecutive quarters.

Whether it is the chaos caused by the crown disease epidemic, the US -China trade war or the across the strait geopolitical concerns, seeking the decentralized operating strategy of "China +1" has become a global trend.Set up branches in other regions to manage supply chain risks.

Taiwan's financial institutions also follow the expansion of corporate customers to the areas outside China. For example, Cathay Pacific Bank expanded employees in Southeast Asia; Fubon HKMA, the largest financial holding company in TaiwanRestricted to exposure in the mainland.

Enterprise Investment

The Ministry of Economic Affairs data shows that in the first 10 months of this year, Taiwan's direct investment in the mainland decreased by nearly 40 % compared with the same period of the previous year.

Michelle Lam, an economist of French Industrial Bank in Greater China, said that over the past seven or eight years, the connection between cross -strait investment and tourist exchanges has indeed appeared signs of looseness, which is partially attributed to the intensive relationship between cross -strait tensions.She said that the Democratic Progressive Party governed and continued to burn the Sino -US trade war, as well as other geopolitical factors.

However, even if the Kuomintang or the People's Party, which supports cross -strait strengthening exchanges, won in the Taiwan election in January, the decoustal trend on both sides of the strait is unlikely to reverse.

"If a company built a new factory in Southeast Asia, it will definitely allocate operating resources there and transfer orders," said Yang Shufei, deputy director of the Regional Development Research Center of the China Institute of Economics and Research.Stop this when the tension is eased. "

Trade exchanges

In terms of trade, the proportion of mainland China ’s total export amount in Taiwan has also declined.As of October this year, mainland China and Hong Kong accounted for about 35%of Taiwan's total exports, which was significantly gapd in 44%in 2020.In the trade items exported to Mainland China, almost all categories from food to machinery and equipment have declined from food to machinery and equipment.

Although the world's world factory is still the key hub of the global supply chain, as China's wages have risen in recent years, and the reduction of subsidies provided by local governments for enterprises, its attractiveness is not as good as before.The US government's export ban on Beijing, high geopolitical pressure has also highlighted risks.

Cross -strait relations are undoubtedly the main issues of previous Taiwan elections. This division and the risk of decentralization of regional agreements are also the focus.The Kuomintang candidate Hou Youyi emphasized that it is necessary to establish closer commercial exchanges with mainland China.Ke Wenzhe, a candidate for the people, mentioned that he hopes to promote the addition of regional comprehensive economic partnerships (RCEP) led by mainland China.

Taiwan applied to join the largest trade agreement in the Asia -Pacific region in 2020, the Cross Pacific Partnership Comprehensive Progress Agreement (CPTPP), but it is still unreasonable. The obstacles behind mainland China are the most important obstacles.Lai Qingde, who is currently the vice president and is a DPP candidate, said that he will continue to promote Taiwan to join the organization smoothly.

"There is no doubt that the result of this presidential election will have a significant impact on cross -strait relations within at least four years in the future," Woei Chen Ho, an economist of Bank of China, believes that "however, diversified thinking is a broader thinkingGlobal Trend. "