The end of 2018 brings to mind several of the year’s most crucial financial and economic developments.
Without a doubt, the biggest development was the retirement of former central bank governor Perng Fai-nan (彭淮南) in February after he led the bank for 20 years. Perng helped keep Taiwan financially stable throughout the 1997 Asian financial crisis, the 2001 dotcom bubble, the 2008 global financial crisis and the 2012 European debt crisis.
The focus has turned to whether Perng’s successor, Governor Yang Chin-long (楊金龍), can shape how the bank handles foreign-exchange rates and interest rates to weather unexpected demands during economic downturns.
The bank’s adjustment of interest rates is closely related to economic fundamentals in the nation and changes in the global macroeconomic environment. On Thursday, the bank decided to keep policy rates unchanged for the 10th consecutive quarter, due to concern over downward pressure on growth because of uncertainty surrounding US-China trade tensions and the momentum of the global economy.
The local stock market has experienced significant fluctuations over the past few months. The sharp correction in the stock market — the TAIEX fell 660.72 points on Oct. 11, ending 345 days of staying above 10,000 points and the longest streak in its history — is the second-biggest development this year.
Capitalization of the Taiwan Stock Exchange (TWSE) hit a high of NT$3.7 trillion (US$120.13 billion) in June — when the TAIEX approached 11,000 points — but retreated to NT$29.08 trillion by the end of last week, as local equities aligned with global levels.
There has been a net selling of more than NT$330 billion in local shares among foreign institutional investors this year, ending six consecutive years of net buying, while the TAIEX has dropped 9.36 percent, according to TWSE tallies.
Noting the uncertainty that shrouds the future of economic fundamentals, Financial Supervisory Commission (FSC) Chairman Wellington Koo (顧立雄) last week forecast that the TAIEX was not likely to consistently stay above 10,000 points next year.
The retirement of Taiwan Semiconductor Manufacturing Co (TSMC) chairman Morris Chang (張忠謀) in June led to the world’s largest contract chipmaker switching to a dual-leadership model, which became one of this year’s most closely watched leadership handovers.
TSMC is now managed by chairman Mark Liu (劉德音) and chief executive officer C.C. Wei (魏哲家) — who had been joint CEOs since 2013. This senior management change marks a smooth transition to the “post-Morris era,” but TSMC in August suffered a computer virus attack that affected some of its fab tools and raised concerns about internal control at the company under the new management team.
An executive shake-up that caught many off guard was the Dec. 13 announcement that Asustek Computer Inc had also moved to a dual-leadership model and named two vice presidents, S.Y. Hsu (許先越) and Samsun Hu (胡書賓), as co-CEOs, while CEO Jerry Shen (沈振來) was to resign so that he could lead a new artificial intelligence and Internet of Things venture. The move came amid the company’s growing operational challenges, but whether the new organizational structure will resonate with market dynamics remains to be seen.
This year will be remembered as an eventful one, but many challenges to the economy remain moving into next year — the US Federal Reserve’s rate hikes, US-China trade tensions, and industry upgrades and transformations in Taiwan — to test the nation’s policymakers and those who command the helms of Taiwanese businesses.
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