Taiwan’s monetary supply measures expanded annually last month, but the pace decelerated further on a monthly basis as investors pulled out of the local bourse and foreign funds fled the country amid growing economic uncertainty, the central bank said yesterday.
M2 — a broad monetary gauge that includes savings deposits, time savings deposits, foreign currency deposits, mutual funds and the narrower M1B gauge of cash and cash equivalents — rose 4.98 percent last month from a year earlier, but its pace of expansion slowed from 5.31 percent in September, the central bank said.
The M1B reading, widely used to track fund movement in the local bourse, increased 7.18 percent last month, easing for the third consecutive month on an annual basis, the bank said.
LISTLESS TRADING
“The listless showing in the local bourse accounted for the fund flight,” said Wu Yih-chuan (吳懿娟), a deputy director of the central bank’s economic research department.
The bank said securities accounts totaled NT$1.4 trillion (US$45.43 billion) at the end of last month, down NT$43.1 billion from one month earlier.
While daily stock turnover rose to an average of NT$79 billion last month from NT$75.6 billion in September, it was still lower than the threshold of NT$80 billion or more estimated by brokerage houses that could help the stock market stay viable.
That is partly because foreign investors pulled a net US$1.28 billion out of Taiwan last month, Wu said, adding that the trend may persist for the rest of the year as global funds increase holdings in US dollar-denominated assets.
Also yesterday, Financial Supervisory Commission Chairman William Tseng (曾銘宗) said brokerage houses may face more headwinds this year in the wake of weak trading momentum in the local stock market from August to last month.
Even so, the nation’s financial sector may generate a record-high net profit this year of between NT$450 billion and NT$500 billion, Tseng said.
The sector’s total net income reached NT$388.38 billion in the first three quarters of the year, with banks, life insurers and brokerage houses reporting net profits of NT$261.8 billion, NT$100.4 billion and NT$26.18 billion respectively, the commission’s data showed.
RECORD PROFITS?
“Therefore, we expect the financial sector to generate more than NT$450 billion in net profit this year, marking the highest level in the sector’s history,” Tseng said after an awards ceremony held by the Taiwan Institute for Sustainable Energy.
Tseng said the government’s deregulation efforts have helped the sector increase its profitability, improved asset quality and satisfied risk coverage.
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