Taiwan may be small, but the island has emerged as a financial superpower thanks to the thriftiness of local savers and an eye-watering current account surplus of about 15 per cent of gross domestic product. The country now has the second-largest financial system in the world, relative to gross domestic product. And its life insurance industry is the biggest, with assets-to-GDP of 145 per cent, according to JPMorgan.
The local economy is not big enough to accommodate these enormous sums, so Taiwanese financial institutions have funnelled a whopping $1.2tn abroad.
…Taiwanese insurers hold about 4 per cent of the entire US investment-grade corporate bond market, and 14 per cent of longer-term corporate bonds, according to JPMorgan. Insurers’ holdings of US mortgage-backed securities have nearly doubled over the past five years, to $260bn. That makes Taiwan the second-biggest foreign owner of such securities.
Here is the FT piece by Robin Wigglesworth.