INDUSTRY
German production falls
German industrial production fell more than expected in March, partly due to a weak performance by the automotive sector, spurring recession fears in Europe’s largest economy. Production decreased by 3.4 percent on the previous month following a slightly revised increase of 2.1 percent in February, the Federal Statistical Office said yesterday. “After a buoyant performance by industrial production at the beginning of the year, there was an unexpectedly sharp decline in March,” the Federal Ministry for Economic Affairs and Climate Action said. The manufacture of motor vehicles and automotive parts fell by 6.5 percent on the previous month. Production in machinery and equipment fell by 3.4 percent, and output in the construction sector decreased by 4.6 percent from a month earlier. In the first quarter, production was 2.5 percent higher than in the final quarter of last year, the statistics office said.
DEBT
Chinese ratio hits 279.7%
The Chinese economy’s debt ratio reached a record high in the first quarter of this year, with bank loans to companies surging as the nation emerged from its “zero COVID-19”policy. The macro leverage ratio — or total debt as a percentage of GDP — soared to 279.7 percent in the first quarter, Bank of China and National Bureau of Statistics data compiled by Bloomberg showed. That was an increase of 7.7 percentage points from the previous quarter, the biggest jump in three years. The debt ratio held by non-financial corporates rose 5.8 percentage points. Leverage ratios for the household and government sectors were each up by about 1 percentage point. The data does not include bank loans to local government financing vehicles.
MINING
Plant gets rules extension
Malaysia granted a six-month extension to Australian miner Lynas Rare Earths Ltd to get its rare earth plant in line with environmental requirements. The deadline for the plant to be radiation-free has been extended to January next year, Science, Technology and Innovation Minister Chang Lih Kang (鄭立慷) said. The Lynas rare earths refinery in Malaysia is the largest outside China, but has been dogged by environmental concerns and community opposition. The government in February issued a new three-year license to Lynas’s plant in the state of Pahang, with one of the conditions requiring that “cracking and leaching” of lanthanide concentrate move to an area outside of Malaysia by July 1. The business unit generates radioactive waste, authorities said.
FINANCE
Venture announces funds
Mitsubishi UFJ Financial Group Inc plans to start two debt funds alongside Liquidity Capital with as much as US$400 million to provide financing for middle and later-stage start-ups in Japan and Europe. The funds would be established under Mars Growth Capital Pte, a joint venture between Japan’s largest bank and the Israeli tech lender, the companies said in a statement. The Japan fund would have a maximum of ￥20 billion (US$14.8 million) and the European fund up to US$250 million, they said. The move is the latest by Japan’s biggest banks to ramp up start-up finance, where they increasingly see potential for new business. Mars Growth Capital, based in Singapore, launched in 2021 and has been providing debt finance to start-ups in Asia and elsewhere.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
The New Taiwan dollar and Taiwanese stocks surged on signs that trade tensions between the world’s top two economies might start easing and as US tech earnings boosted the outlook of the nation’s semiconductor exports. The NT dollar strengthened as much as 3.8 percent versus the US dollar to 30.815, the biggest intraday gain since January 2011, closing at NT$31.064. The benchmark TAIEX jumped 2.73 percent to outperform the region’s equity gauges. Outlook for global trade improved after China said it is assessing possible trade talks with the US, providing a boost for the nation’s currency and shares. As the NT dollar
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
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