Taipei: The overseas exposure of Taiwan's financial holding companies soared to unprecedented levels at the close of the second quarter, with significant growth observed in their exposure to Japan, which ranked among the top 10 debtor countries, according to the Financial Supervisory Commission (FSC).

According to Focus Taiwan, the exposure of Taiwanese financial holding firms to international markets as of the end of June totaled NT$31.48 trillion (US$976.88 billion), surpassing the previous record of NT$30.6 trillion set at the end of March. This data, provided by the FSC, highlights the increasing overseas lending, interbank loans, and investments by these firms, marking a consistent upward trend since the second quarter of 2015.

Japan held its position as the third-largest debtor country for Taiwanese financial firms at the end of June. The exposure to Japan saw a significant rise of 45.9 percent from the first quarter. Analysts attribute this increase to the economic interactions between Taiwan and Japan, particularly following investments by Taiwan Semiconductor Manufacturing Co. in Kumamoto, which encouraged other Taiwanese manufacturers to increase their financial commitments in Japan.

By the end of the second quarter, the financial exposure of Taiwanese firms to Japan reached NT$1.6 trillion, which is a 45.9 percent increase from the previous year and a 4.3 percent rise from the first quarter. The United States maintained its position as the largest debtor country for Taiwanese financial firms for the 45th consecutive quarter, with exposure reaching NT$11.1 trillion, up 16.7 percent from the previous year and 4.48 percent from the previous quarter.

The increase in exposure to the U.S. is largely due to long-term investments in marketable securities and bonds within the American capital market. China remained the second-largest debtor country with an exposure of about NT$2 trillion by the end of June, marking a 6.4 percent increase from the previous year and a 3.4 percent increase from the previous quarter.

Australia ranked fourth, with Taiwanese financial firms' exposure rising by 29.8 percent from the previous year and 2.34 percent from the previous quarter to NT$1.5 trillion by the end of June. Bank sources indicate that Taiwanese banks are increasingly interested in establishing branches in Australia, driven by optimism about corporate banking and cross-border financing opportunities.

The other economies rounding out the top 10 debtor countries include France (NT$1.41 trillion), the United Kingdom (NT$1.35 trillion), South Korea (NT$1.23 trillion), Hong Kong (NT$1.04 trillion), Canada (NT$919 billion), and the United Arab Emirates (NT$626 billion), as reported by the FSC.