No Place To Hide From China-Taiwan Conflict, Investors Say

Once seen as unthinkable, the risk of a Chinese invasion of Taiwan is now a tail-risk scenario many investors feel they must take seriously—though few see ways to hedge against it.

Foreign investors have pulled nearly $11 billion from Taiwanese equities in 2025.

As Ankur Banerjee reported for Reuters, the deterioration in U.S.-China relations under President Donald Trump has heightened fears, especially after the reimposition of sweeping trade tariffs.

An outright conflict could collapse Taiwan’s financial system, currency, and autonomy. “You can’t settle any trades, the currency might disappear altogether,” said Mukesh Dave, CIO of Singapore-based Aravali Asset Management.

“You either carry on like it’s business as usual or stay away.” Betting site Polymarket has seen the odds of an invasion rise to 12%—from nearly zero earlier this year.

Foreign investors have pulled nearly $11 billion from Taiwanese equities in 2025, largely due to economic concerns, though inflows resumed tentatively in May. Taiwan’s benchmark index is down 6% for the year.

The Trump administration’s posture stands in contrast to Biden’s stated willingness to defend Taiwan militarily, while the long-standing U.S. position of “strategic ambiguity” remains officially intact.