Despite sufficient momentum in the capital markets, uncertainties over Taiwan’s economy have made investors hesitant about investing in the stock market and helped to further drag down monetary aggregate (M1B) growth last month, the central bank said in a statement yesterday.
M1B — a narrow measurement of the supply of money in circulation, including currency and passbook savings deposits — rose 2.73 percent last month from the previous year, lower than the 2.88 percent growth posted in July, the bank said in a report.
It was the fourth consecutive month that M1B growth had slowed, with the 2.88 percent rise marking the lowest increase since February 2009, the bank’s data showed.
The broader M2 monetary aggregate — which includes M1B, time deposits, foreign currency deposits and mutual funds — increased 3.69 percent year-on-year last month, slower than the 3.8 percent growth posted the previous month. It was the lowest increase since June 2010, the bank said.
“The slowing growth rates of both M1B and M2 last month were mainly due to slowing growth in bank loans and investments,” Chen E-dawn (陳一端), deputy head of the central bank’s economic research department, said at a press conference.
The amount of demand deposits rose to NT$10.895 trillion (US$369.59 billion) at the end of last month, up from NT$10.774 trillion, with investors depositing the cash dividends they received last month, the bank’s statistics showed.
The same situation also occurred in the outstanding balance held in securities accounts, which increased NT$91.8 billion month-on-month to NT$1.298 trillion last month, ending the previous five month consecutive fall, data showed.
Chen said that this meant that the nation’s capital momentum remained abundant, but weakened economic sentiment this year has also encouraged investors to hold onto capital, which had further restricted M1B growth.
In the first eight months, the average annual growth rates of M1B and M2 were 3.25 percent and 4.5 percent respectively, central bank data showed.