Taiwan’s economy is facing greater downside risks as indicated by a slew of new financial data and a bearish business outlook issued by industry heavyweights. As Taiwan has an export-oriented economy, it is prone to changes outside its control. As global economic uncertainty and geopolitical tensions mount, the government should prepare with continuous measures to keep the nation’s economic growth and investor confidence in check.
The TAIEX fell 1.23 percent yesterday, breaching the key level of 13,000 points and totaling a 29 percent fall so far this year, as it hit 12,966.05 points. Local and foreign institutional investors turned bearish on the local equity market yesterday, selling NT$10.087 billion (US$315.25 billion) of local stocks. The New Taiwan dollar yesterday tumbled NT$0.113 to NT$31.997 against the US dollar, hitting a six-year low.
The Taiwan Stock Exchange has repeatedly called on investors to act rationally amid fluctuations on local stock markets, saying that local companies have greater resilience against downturns. Investors are not convinced by those assertions as they know that the stock market can go south in a flash, especially with the world economy on the brink of recession and as central banks struggle to tame inflation.
Deputy Minister of Finance Frank Juan (阮清華), who serves as executive secretary of the National Stabilization Fund, hinted early this month that the NT$500 billion fund would continue buying shares on local stock markets to buoy the TAIEX. Taiwan Semiconductor Manufacturing Co (TSMC) stock was one of the major targets, Juan said, as the company has the heaviest-traded shares on the local stock market.
However, doubts were raised among local investors as the TAIEX has slumped about 9.5 percent since the fund’s intervention.
As part of the government’s intervention, the Financial Supervisory Commission (FSC) last week introduced further curbs on short selling after the TAIEX plunged to its lowest level in nearly two years. Starting on Wednesday last week, the volume of intraday securities lending to short sell a stock was lowered to 10 percent of the stock’s average daily trading volume over the previous 30 sessions, down from 20 percent. The commission also raised the cost of short selling by increasing the amount of money an investor must deposit for securities borrowing to 120 percent of a stock’s value, up from 100 percent.
Yet TSMC shares extended previous losses yesterday, tumbling 3.64 percent to close at NT$397, amid growing fears that a global economic slowdown would further dampen the already sluggish demand for consumer electronics, smartphones and computers. TSMC shares have plummeted more than 37 percent since the start of this year. The world’s biggest contract chipmaker slashed its capital spending this year by 18 percent to US$36 billion, as demand for 7-nanometer chips used in smartphones and PC’s weakened. It is also cautious about its business outlook for next year.
Taiwan’s exports last month dipped into negative territory, down 5.3 percent year-on-year to US$37.53 billion, ending 26 months of expansion, according to Ministry of Finance statistics. The ministry said demand for almost all product categories sagged amid surging global inflation and monetary tightening, and warned of hardship ahead as Taiwan’s exports are likely to weaken further this quarter, persisting through the first half of next year.
Taiwan’s economy is expected to expand at a lower pace of 2.8 percent next year, compared with 3.3 percent this year, the IMF projected.
With the external environment worsening, the government should introduce more stimulus measures to spur domestic demand, offset external shock and regain investor confidence.
As the Chinese Communist Party (CCP) and its People’s Liberation Army (PLA) reach the point of confidence that they can start and win a war to destroy the democratic culture on Taiwan, any future decision to do so may likely be directly affected by the CCP’s ability to promote wars on the Korean Peninsula, in Europe, or, as most recently, on the Indian subcontinent. It stands to reason that the Trump Administration’s success early on May 10 to convince India and Pakistan to deescalate their four-day conventional military conflict, assessed to be close to a nuclear weapons exchange, also served to
The recent aerial clash between Pakistan and India offers a glimpse of how China is narrowing the gap in military airpower with the US. It is a warning not just for Washington, but for Taipei, too. Claims from both sides remain contested, but a broader picture is emerging among experts who track China’s air force and fighter jet development: Beijing’s defense systems are growing increasingly credible. Pakistan said its deployment of Chinese-manufactured J-10C fighters downed multiple Indian aircraft, although New Delhi denies this. There are caveats: Even if Islamabad’s claims are accurate, Beijing’s equipment does not offer a direct comparison
After India’s punitive precision strikes targeting what New Delhi called nine terrorist sites inside Pakistan, reactions poured in from governments around the world. The Ministry of Foreign Affairs (MOFA) issued a statement on May 10, opposing terrorism and expressing concern about the growing tensions between India and Pakistan. The statement noticeably expressed support for the Indian government’s right to maintain its national security and act against terrorists. The ministry said that it “works closely with democratic partners worldwide in staunch opposition to international terrorism” and expressed “firm support for all legitimate and necessary actions taken by the government of India
Taiwan aims to elevate its strategic position in supply chains by becoming an artificial intelligence (AI) hub for Nvidia Corp, providing everything from advanced chips and components to servers, in an attempt to edge out its closest rival in the region, South Korea. Taiwan’s importance in the AI ecosystem was clearly reflected in three major announcements Nvidia made during this year’s Computex trade show in Taipei. First, the US company’s number of partners in Taiwan would surge to 122 this year, from 34 last year, according to a slide shown during CEO Jensen Huang’s (黃仁勳) keynote speech on Monday last week.
RSS