The nation’s money supply gauges last month lost momentum, with securities accounts having their largest monthly drop in 12 years as stock routs drove retail and institutional investors to the sidelines, the central bank said yesterday.
The narrow money supply measure of M1B, referring to cash and cash equivalents, grew at an annual rate of 10.92 percent, slowing from 11.08 percent a month earlier, after stock investors trimmed positions in local shares, the bank said.
M1B, which is used to speculate on liquidity available for stock investments, remained high, despite the slowdown, outpacing an increase of 8.11 percent for the broad measure of M2, which encompasses time deposits, time saving deposits, foreign currency deposits, mutual funds and M1B.
Photo: Chen Mei-ying, Taipei Times
When the M2 is larger than the M1B, it is considered unfavorable for stock investments, as it suggests people would prefer to put money in time deposits.
The latest data showed that investors’ securities accounts shed NT$89.9 billion (US$3.07 billion) to NT$3.1 trillion last month, the central bank said.
The retreat is the steepest since May 2010, and had a lot to do with Russia’s invasion of Ukraine and lockdowns in major Chinese cities, it said.
Individual investors accounted for 62.3 percent of activity on the local bourse, down from 74.7 percent in July last year, it said.
Foreign portfolio managers cut holdings in local shares by a net NT$267.4 billion last month, it said.
However, overall savings deposits by foreign investors picked up NT$26.5 billion, indicating that some are waiting for re-entry opportunities, the bank said.
M2 gathered some strength from a month earlier partly because several corporations wired profit home from overseas to fund cash dividend distributions later this year, the central bank said.
By contrast, foreign currency deposits spiked 16.13 percent year-on-year to reach US$7.64 trillion, supported by a strong US dollar and robust exports, it said.
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