European markets attract Taiwanese investment capital
Taiwanese Investors Shift Away from US Dollar Assets Towards Europe
Taiwanese investors are increasingly moving their assets from US-dollar investments to European markets, marking a significant shift in investment strategy. This change is driven by a broader global trend of moving away from the US dollar and a reassessment of long-held US asset dominance.
Key factors contributing to this shift include the declining attractiveness of US dollar assets and increased capital inflow into European assets. Taiwanese funds focusing on the US have seen a fall in their combined value by NT$538 billion over the first half of the year, marking the largest six-month decline since 2003. Assets in US-focused overseas funds also dropped significantly, indicating reduced confidence or appeal in US investments.
Conversely, over the same period, Taiwanese investors poured NT$14.1 billion into Europe-focused overseas funds, bringing total assets to their highest level since 2019 (NT$134.8 billion). This indicates a pivot toward European markets, perceived as more favorable or offering better opportunities.
The move represents a critical turning point for Taiwan's wealthy institutional investors, previously strong holders of US Treasury bonds. The sale of US government bonds (a decrease of US$5.9 billion from April to May) aligns with this broader reallocation. Taiwan is the 11th largest foreign holder of US Treasuries, with US$292.9 billion in US government bonds as of the end of May.
The shift is part of a worldwide capital movement away from the US dollar, encouraging Taiwanese investors to diversify into European assets as part of strategic portfolio adjustments. BNP Paribas Wealth Management for Asia-Pacific chief executive officer Arnaud Tellier stated that Taiwan's wealthy families are shaken by the volatility in the local currency and are looking to diversify outside of US-denominated assets, starting with the euro.
More than 90 percent of the NT$22 trillion that Taiwan's life insurance companies have invested overseas is in US dollar-denominated assets. However, retail investors in US bond-focused exchange-traded funds were also affected by the currency's dramatic appreciation, prompting renewed debate in Taiwan over the need for greater diversification.
Lin, a markets strategist at JPMorgan Asset Management, expects Taiwan's retail investors to start focusing on Europe if European shares extend their gains until next year. This trend is expected to continue as investors seek alternatives to the combined US$7.5 trillion that Asia's major exporting economies have invested in US equities and debt.
In conclusion, the shift is caused by Taiwanese institutional investors’ reassessment of US dollar asset dominance amid global de-dollarization trends, preference for portfolio diversification, and increased confidence in European markets relative to the US in 2025.
Investors from Taiwan, who have traditionally favored US-dollar investments, are now shifting their focus towards Europe, marking a significant change in investment strategy. This trend is driven by the declining attractiveness of US dollar assets, increased capital inflow into European assets, and a growing preference for portfolio diversification.
As a result of this shift, Taiwanese funds that previously focused on the US have seen a significant drop in their combined value, while investments in Europe-focused overseas funds have reached their highest level since 2019. This move toward European markets is expected to continue as investors seek alternatives to US equities and debt.
