The contraction in Taiwan’s export orders could have narrowed to 5 percent last month from a year earlier, compared with a 10.9 percent decline in February, as Asia’s growth slowdown might be close to a trough, Australia and New Zealand Banking Group Ltd (ANZ) said on Friday.
Export orders — a critical gauge of how actual exports are likely to perform in one to three months — had slipped into negative territory for four straight months, as companies adjusted their inventory during the slow sales season.
The Ministry of Economic Affairs is to release its export order data today.
“A key leading indicator for the global technology cycle is pointing toward a rebound, which would bode well for Asia’s exports,” ANZ said in a note, referring to the region’s purchasing managers’ index (PMI).
Across the region, export data for last month has been mixed, but the latest PMI data point to a likely improvement in the months ahead, it said.
China is Taiwan’s largest trade partner accounting for 40 percent of exports, and its GDP beat expectations increasing 6.4 percent last quarter, ANZ said.
Monetary stimuli from some Asian central banks would also help growth in the region recover in the second half of the year, it added.
However, ANZ said that the magnitude of the predicted recovery is likely to be moderate initially, given the inventory overhang in some economies.
Asia’s exports have been deteriorating since November last year, with a 12.3 percent contraction in all emerging markets in February, which was the worst performance since early 2016, it said.
However, the worst is likely over as evidenced by a recent rebound in the PHLX Semiconductor Index (SOX), the bank said.
The SOX, an equity index of companies listed in the US whose primary business operations involve the design, distribution, manufacture and sale of semiconductors, typically leads actual semiconductor sales by about three months, ANZ said.
The improving SOX suggests that a recovery in global semiconductor sales is around the corner, as Asia’s export cycle is closely tied to the global technology cycle, it said.
Asian economies have seen US$23 billion in foreign equity fund inflows so far this year, which supports the expectation of a recovery, it said.
The amount has not fully offset the outflows of US$39 billion recorded last year, suggesting there is more room for fund inflows and modest appreciation in Asian currencies, ANZ said.
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