Growth of the nation’s money supply was slower last month than the previous month, reflecting a weaker stock market and the continuing outflow of net foreign capital, the central bank said in a statement released yesterday.
As one of the measures of monetary aggregates showed the lowest growth in seven years and signaled that weak investor sentiment had dealt a serious blow to local equities, economists said the central bank might avoid aggressive interest rate hikes at its next board meeting in September.
The M2 money supply indicator rose 1.7 percent last month from a year earlier, after the broadest measure of the nation’s monetary aggregates grew 2.34 percent in May, the central bank’s latest tallies showed.
M1B, another money supply gauge that includes currency held by the public and deposit money, registered a 3.04 percent decline last month from a year earlier, following a drop of 1.14 percent in the previous month.
M2 includes M1B, time deposits, time savings deposits, foreign currency deposits and mutual funds.
The central bank’s data indicated that the decline in the M1B last month was the weakest since July 2001, indicating that a substantial amount of capital had been moved from stocks after the benchmark TAIEX dropped 1,095.54 points, or 12.71 percent, within a month.
“The deceleration was the result of light trading volume in the equity market and continuous net outflow of foreign investors,” Cheng Cheng-mount (鄭貞茂) and Tina Liao, economists at Citi Investment Research, wrote in a research note released yesterday. “M1B growth in particular has reached a seven-year low.”
For the first half of the year, M2 supply grew 1.73 percent year-on-year, while M1B rose 1.44 percent over the same period, the bank’s data showed.
Neither last month’s M2 growth rate nor that for the first half fell within the central bank’s target range of 2 percent to 6 percent, even though the monetary authority decided last month at its quarterly board meeting to lower its growth target from between 3 percent and 7 percent — set earlier this year— to reflect the liquidity situation.
Commenting on the latest money supply data, both Cheng and Liao said that rising inflation and slower money growth momentum would leave the central bank little room for further rate hikes.
“We expect just one more rate hike in September. Negative M1B growth suggested domestic investors were still cautious about the equity outlook and would rather save their money in time deposits,” they wrote.
WEAKER ACTIVITY: The sharpest deterioration was seen in the electronics and optical components sector, with the production index falling 13.2 points to 44.5 Taiwan’s manufacturing sector last month contracted for a second consecutive month, with the purchasing managers’ index (PMI) slipping to 48, reflecting ongoing caution over trade uncertainties, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. The decline reflects growing caution among companies amid uncertainty surrounding US tariffs, semiconductor duties and automotive import levies, and it is also likely linked to fading front-loading activity, CIER president Lien Hsien-ming (連賢明) said. “Some clients have started shifting orders to Southeast Asian countries where tariff regimes are already clear,” Lien told a news conference. Firms across the supply chain are also lowering stock levels to mitigate
Six Taiwanese companies, including contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), made the 2025 Fortune Global 500 list of the world’s largest firms by revenue. In a report published by New York-based Fortune magazine on Tuesday, Hon Hai Precision Industry Co (鴻海精密), also known as Foxconn Technology Group (富士康科技集團), ranked highest among Taiwanese firms, placing 28th with revenue of US$213.69 billion. Up 60 spots from last year, TSMC rose to No. 126 with US$90.16 billion in revenue, followed by Quanta Computer Inc (廣達) at 348th, Pegatron Corp (和碩) at 461st, CPC Corp, Taiwan (台灣中油) at 494th and Wistron Corp (緯創) at
NEW PRODUCTS: MediaTek plans to roll out new products this quarter, including a flagship mobile phone chip and a GB10 chip that it is codeveloping with Nvidia Corp MediaTek Inc (聯發科) yesterday projected that revenue this quarter would dip by 7 to 13 percent to between NT$130.1 billion and NT$140 billion (US$4.38 billion and US$4.71 billion), compared with NT$150.37 billion last quarter, which it attributed to subdued front-loading demand and unfavorable foreign exchange rates. The Hsinchu-based chip designer said that the forecast factored in the negative effects of an estimated 6 percent appreciation of the New Taiwan dollar against the greenback. “As some demand has been pulled into the first half of the year and resulted in a different quarterly pattern, we expect the third quarter revenue to decline sequentially,”
ASE Technology Holding Co (ASE, 日月光投控), the world’s biggest chip assembly and testing service provider, yesterday said it would boost equipment capital expenditure by up to 16 percent for this year to cope with strong customer demand for artificial intelligence (AI) applications. Aside from AI, a growing demand for semiconductors used in the automotive and industrial sectors is to drive ASE’s capacity next year, the Kaohsiung-based company said. “We do see the disparity between AI and other general sectors, and that pretty much aligns the scenario in the first half of this year,” ASE chief operating officer Tien Wu (吳田玉) told an
RSS