The central bank on Sunday issued a rare statement to dismiss claims by Japan’s Nomura Securities Co that six economies, including Taiwan’s, are vulnerable to financial crises over the next three years given rising bubble signs.
Nomura said that its proprietary indicator showed that Taiwan, Germany, Japan, the Netherlands, Sweden and the US are susceptible to financial crises over the next 12 quarters, judging by their ratios of private credit to GDP ratios, debt service ratios, equity prices, property prices and effective foreign-exchange rates.
A Singapore-based research team at Nomura raised the alarm based on Cassandra data modeling, which it said has correctly predicted two-thirds of the past 53 crises in 40 countries since the early 1990s.
Photo: Bloomberg
“The Nomura report is inaccurate regarding Taiwan as it fails to understand that healthy economic fundamentals, rather credit inflation, push up the nation’s five indicators,” the central bank said.
Trade tensions between the US and China, and the ensuing realignment of supply chains, has allowed Taiwanese firms to enjoy order transfers and an increase in bank loans resulting mainly from companies shifting production lines home from China, the central bank added.
The continuation of money printing by major central banks helps drive up property prices in Taiwan, and the central bank has introduced selective credit controls to slow the pace, it said, adding that bad loans from real-estate lending are low.
Although Taiwanese lenders have increased loans to small and medium-sized borrowers to help them manage the pains induced by the COVID-19 pandemic, all loans are covered by the Small and Medium Enterprise Credit Guarantee Fund of Taiwan (信保基金), it added.
The central bank dismissed concerns over asset price bubbles in Taiwan, saying that strong corporate earnings and a bright outlook for exports account for the rallies in the local bourse this year and last year.
The appreciation in the local currency has more to do with export-driven current account surpluses rather than hot money influxes, it said, adding that it would intervene whenever it spots abnormal fund movements that could destabilize the foreign-exchange market.
“Overall, Taiwan is not in danger of having a financial crisis,” the bank said, adding that banks and life insurance companies all report improving profitability and capital adequacy.
With an approval rating of just two percent, Peruvian President Dina Boluarte might be the world’s most unpopular leader, according to pollsters. Protests greeted her rise to power 29 months ago, and have marked her entire term — joined by assorted scandals, investigations, controversies and a surge in gang violence. The 63-year-old is the target of a dozen probes, including for her alleged failure to declare gifts of luxury jewels and watches, a scandal inevitably dubbed “Rolexgate.” She is also under the microscope for a two-week undeclared absence for nose surgery — which she insists was medical, not cosmetic — and is
CAUTIOUS RECOVERY: While the manufacturing sector returned to growth amid the US-China trade truce, firms remain wary as uncertainty clouds the outlook, the CIER said The local manufacturing sector returned to expansion last month, as the official purchasing managers’ index (PMI) rose 2.1 points to 51.0, driven by a temporary easing in US-China trade tensions, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. The PMI gauges the health of the manufacturing industry, with readings above 50 indicating expansion and those below 50 signaling contraction. “Firms are not as pessimistic as they were in April, but they remain far from optimistic,” CIER president Lien Hsien-ming (連賢明) said at a news conference. The full impact of US tariff decisions is unlikely to become clear until later this month
GROWING CONCERN: Some senior Trump administration officials opposed the UAE expansion over fears that another TSMC project could jeopardize its US investment Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is evaluating building an advanced production facility in the United Arab Emirates (UAE) and has discussed the possibility with officials in US President Donald Trump’s administration, people familiar with the matter said, in a potentially major bet on the Middle East that would only come to fruition with Washington’s approval. The company has had multiple meetings in the past few months with US Special Envoy to the Middle East Steve Witkoff and officials from MGX, an influential investment vehicle overseen by the UAE president’s brother, the people said. The conversations are a continuation of talks that
CHIP DUTIES: TSMC said it voiced its concerns to Washington about tariffs, telling the US commerce department that it wants ‘fair treatment’ to protect its competitiveness Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday reiterated robust business prospects for this year as strong artificial intelligence (AI) chip demand from Nvidia Corp and other customers would absorb the impacts of US tariffs. “The impact of tariffs would be indirect, as the custom tax is the importers’ responsibility, not the exporters,” TSMC chairman and chief executive officer C.C. Wei (魏哲家) said at the chipmaker’s annual shareholders’ meeting in Hsinchu City. TSMC’s business could be affected if people become reluctant to buy electronics due to inflated prices, Wei said. In addition, the chipmaker has voiced its concern to the US Department of Commerce
RSS