Lehman Brothers and Deutsche Bank have predicted the central bank will leave benchmark interest rates unchanged tomorrow, given low inflation and rising uncertainty over global economic growth.
"With low inflation and high global uncertainty, Taiwan's central bank has likely dropped its tightening bias," Lehman Brothers said in its weekly economic report released yesterday.
"We expect Taiwan's central bank to stay on hold in September after hiking by a more than expected 25 basis points to 3.125 percent in the previous meeting," the US investment bank said.
That hike was the 12th interest rate increase the central bank has imposed since October 2004 to stem the inflationary threat. It was twice as large as the 0.125 percentage points in previous hikes.
This time, the central bank is expected to leave its benchmark interest rate unchanged. The market expects the bank will make its move depending on what the US Federal Reserve would do when it met yesterday. Most analysts expect a rate cut.
Deutsche Bank said the central bank would leave its rates unchanged because of a concern that the nation's growth momentum will ease due to weak exports, the German bank said in a report released on Monday.
Taiwan's economy expanded 5.07 percent in the second quarter from a year earlier, beating market predictions, with private investment growing 12.5 percent in the second quarter in particular, the Directorate General of Budget, Accounting and Statistics (DGBAS) reported on Aug. 23.
While the agency predicted a 4.58 percent growth in the economy for the year, the turmoil on the global financial market could undermine this recovery, Deutsche Bank said.
Lehman Brothers kept its prediction of 4.2 percent growth for this year and 5 percent for next year, while Deutsche Bank forecast 4.2 percent growth this year and revised its forecast for next year from 4 percent to 3.6 percent.
With credit crunch worries in the world's major economies that undercut a recovery in the global tech sector, "weaker than expected exports could derail a recovery of [Taiwan's] domestic demand," Deutsche Bank said.
"Meanwhile, mainland GDP growth is expected to weaken by at least 100 basis points in 2008 from 2007 in response to monetary tightening and administrative measures to curb asset price and CPI inflation pointing to weaker growth in [Taiwan's] exports of steel, chemical and petrochemical products," it said in the report
Deutsche Bank warned further consolidation in financial markets would likely mean weaker private consumption growth.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
MAJOR BENEFICIARY: The company benefits from TSMC’s advanced packaging scarcity, given robust demand for Nvidia AI chips, analysts said ASE Technology Holding Co (ASE, 日月光投控), the world’s biggest chip packaging and testing service provider, yesterday said it is raising its equipment capital expenditure budget by 10 percent this year to expand leading-edge and advanced packing and testing capacity amid strong artificial intelligence (AI) and high-performance computing chip demand. This is on top of the 40 to 50 percent annual increase in its capital spending budget to more than the US$1.7 billion to announced in February. About half of the equipment capital expenditure would be spent on leading-edge and advanced packaging and testing technology, the company said. ASE is considered by analysts