Annual growth of the nation’s money supply last month picked up in the narrow M1B gauge and retreated slightly in the broad M2 gauge, as Taiwanese investors raised their holdings in local shares and foreign bonds, the central bank said yesterday.
The M1B money supply measure, which refers to cash and cash equivalents, grew 5 percent from a year earlier, compared with a 4.94 percent increase the previous month, central bank data showed.
The securities account balance last month soared by a record NT$179.9 billion (US$5.55 billion) to a fresh peak of NT$3.56 trillion, the bank said.
Photo: CNA
The advance in M1B and the securities account balance had much to do with a bullish TAIEX and the number of transactions, central bank research official Tsao Ti-jen (曹體仁) told an online news conference.
The TAIEX ended last month at a record high of 21,107 points with margin trading, a risk appetite indicator, swelling to NT$409.5 billion, the highest since June 2008, Tsao said.
The main board has benefited from capital inflows from foreign and local investors who are aiming to take advantage of the artificial intelligence boom, he said.
Meanwhile, retail Taiwanese investors displayed more interest in the local bourse than institutional players and were responsible for 56.3 percent of overall transactions, Tsao said.
A poll conducted last week by Cathay Financial Holding Co (國泰金控) found that 47.3 percent of Taiwanese are expecting the TAIEX to rise further in the coming six months and 37 percent plan to channel their cash into stock investments.
The M2 money supply measure, which encompasses time deposits, time saving deposits, foreign currency deposits, mutual funds and M1B, grew 6.04 percent year-on-year last month, slowing from an annual increase of 6.06 percent a month earlier, the central bank said.
The retreat was due to Taiwanese trimming their time deposits and increasing their positions in foreign bonds on the expectation that the US Federal Reserve would lower interest rates later this year, Tsao said.
Interest rate cuts would boost bond prices.
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